Employee fraud can be a double-edged sword
While companies have been warned about the direct financial consequences of employee fraud, they will also take a blow to their reputation if they don’t take the adequate steps to prevent fraud from occurring, according to Warwick Dolman, Director of Dolman Bateman.

“Companies shouldn’t just be concerned about how much money they will directly lose if one of their employees is found to have misappropriated funds,” said Warwick Dolman.

“Employee fraud is actually a double-edged sword. In an era where risk management is heavily scrutinised, companies, and directors in particular, should also be very concerned about their own reputation if a major fraud occurs, especially if it were found that the right systems and controls were not in place.

“Loss of reputation can have major ongoing negative effects on company earnings and on individual careers.

“We have also seen fraud occur within a number of large companies where the investigation of the incident uncovered chronic cultural problems within the company. In such cases cultural weakness was found to be a major factor contributing to the propensity for fraud to occur.

“If this is the case then at the end of the day investors will hold the directors of the company accountable for putting the organisation at risk. The subsequent damage to individual and corporate reputation can be quite severe.

“Ironically, the risk of losing reputation is the very thing that often prevents CEOs from acting on fraud in their own company even if they know it is occurring, which is why the best option is to tackle the potential for employee fraud before it hits.

“It is essential that any steps taken to either prevent fraud from occurring or to investigate an incidence of fraud are handled in a highly sensitive manner that doesn’t put the staff or management offside,” said Warwick Dolman.

Dolman Bateman specialises in the detection, investigation and minimisation of fraud in the workplace, and has developed a cultural survey to determine the anti-fraud strength of an organisation’s culture. Warwick Dolman CA, CPA is a founder and Director of Dolman Bateman.

Dolman Bateman has also launched a free online fraud check-up on their website. Any business can go to the website – www.dolmanbateman.com.au – and answer a series of short questions designed to assess the likelihood of employee fraud occurring in their business.

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Released for Dolman Bateman by Dennis Rutzou Public Relations. For further information contact David Lizzio or
Dennis Rutzou on (02) 9413 4244.