Protecting Your Company From Employee Fraud

An employee working from a computer.

Employee fraud is serious. In some cases, schemes like embezzlement and trade secret theft go undetected for years. Companies are sometimes victimized to the tune of millions of dollars. Any company can be susceptible to employee fraud, but it is often harder to detect in larger organizations.

Fraud can also expose your company to liability and legal problems. The fact is, your company cannot afford to go without adequate controls and policies against employee fraud. Working with the business law attorneys of Rosenbaum & Taylor, we can help you fight it.

There Are Many Forms Of Employee Fraud

One study estimated that the average company loss due to employee fraud was $1.13 million in 2016. Fraud often falls into one or more of the following categories:

  • Embezzlement
  • Stealing cash and non-cash assets from the company
  • Intentionally omitting or making misrepresentations in financial reports
  • Conflicts of interest
  • Use of a position for personal enrichment
  • Theft of trade secrets and other intellectual property

We can work with you on identifying and mitigating threats to your company through a fraud prevention strategy. There are many elements involved with this approach, including:

Conducting Adequate Background Checks

It’s vital to know what sort of employees you are bringing in to your organization, and background checks help. Of course, these checks must be compliant with all applicable laws, and we can ensure they are. We can also draft enforceable employment agreements that obligate employees to report later misconduct. For example, you may have licensed professionals in your business who are required to observe certain ethical rules. If the employee violates those rules, you need to know, and we can make sure you do.

Training Employees to Identify and Report Fraud

Far too few companies train their own employees on how to recognize and report fraud. If your employees don’t know what to look for, it becomes harder to stop it. We can explain the many different types of illegal activities, and what to do about them, through appropriate training materials. Our firm can also help you create a confidential reporting system if you don’t already have one.

Developing Proper Internal Controls for Handling Sensitive Information

Your employees may come into contact with customer data such as bank account and Social Security numbers. Or they may handle trade secrets, intellectual property, and other proprietary information. Internal controls can be developed that limit who has access to this information. These controls also track who actually does access it, in the event it is misappropriated. We can also advise what legal action can be taken to limit your company’s liability in the event of theft.

Partner with Other Outside Professionals

Attorneys are not the only individuals who can help your company develop fraud prevention strategies. Forensic accountants, fraud examiners, certified public accountants, and others can lend their advice. Depending on the nature of your business, these and other outside professionals can help protect your organization.

These approaches often touch on issues affecting employees’ rights, such as privacy. They may also invoke labor and other laws and regulations. In some cases, you may need to adopt policies that require active participation from employees. It is essential to make sure your company observes all appropriate laws. You also need to make sure that any agreements entered into with your employees are legally enforceable. That’s why you need the trusted team at Rosenbaum & Taylor.

Count On Our Experienced Business Law Attorneys

No company wants to be victimized by its own employees. Unfortunately, this happens far more frequently than many business leaders want to admit. Every organization needs proper mechanisms to identify, stop, and take legal action against employee fraud. That’s where we come in. Whatever your company’s needs, you can count on Rosenbaum & Taylor. Reach out to us today to find out what we can do for you.

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