10 WARNING SIGNS OF FRAUD AND WHAT TO DO WITH IT

What is Fraud?

It is a criminal deception for personal gain.

What is a Warning Sign?

It is anything that indicates a potential problem.

Contrary to what many may think, fraud can be committed by the kindest, most admired people and they are all around us. There are no physical signs to look out for on the body of a fraudster, they are almost always well appeared.

It is not an easy task to make reports of suspicions of fraud especially when the suspects are your work mates, family, or close friends but the alternatives to not reporting can hurt you, your organization and even the people you are trying to protect.

It is always best to flag the signs when they are spotted and nip it in the bud.

The following are signs of potential fraud activities:

  1. Resisting business improvement controls – For some employees that have worked in an organization for many years, a sense of ownership creeps in and an “above the law” attitude is displayed, they believe that such controls are for newbies and therefore not welcome by them and may override controls.
  2. Reluctance to share tasks and responsibilities – When there is an unwillingness to share duties especially when it is becoming overwhelming and glaring to everyone, it may be an indication of clandestine activities and should be flagged.
  3. Unfriendliness – This is a defence for no one to come close enough to find them out. The less friendly they are the more difficult it is for anyone to question their activities. Such people put up very nasty attitude at the slightest inquiry by internal clients.
  4. Over friendliness – My experience as former Head of Procurement and internal audit personnel exposed me to the unassuming nature of potential fraud scheme and being too friendly is one. There are two kinds of overly friendly people.

Those who deserve an Oscar for acting that way to appear welcoming with a “I have nothing to hide” demeanor. And those with the actual nature accompanied by low self-esteem and lack of confidence. The latter may condone anything and engage in any act especially if they have needs.

These categories of people give the most compliments even when they are not deserved by the recipient. They agree to everything and anything.

5. Refusal to take annual leave, rest days, or time off work – According to Labor Act (Cap L1 LFN 2004) a worker is entitled to annual leave of specific days depending on the duration with the organization, Public Holidays, and weekly rest days. Refusal to take any of these statutory holidays when due is a red flag, except it is avoidable in view of the nature of the job or deferred by mutual agreement.

6. Unrepentant borrowing – When there is always a need to borrow and complain of inadequate income, this sign oozes discontentment and living above and beyond one’s earnings.

7. Extravagant life that is incompatible with earnings – This warning sign is common amongst those who believe they deserve the good life and have been trusted with key positions.

8. Close relationship with vendors/contractors – For purchasing officers, it is best practice to disclose to your employer, the existence of a relationship with vendors, otherwise it is seen as a sign of potentially fraudulent activity when discovered.

9. Addictions – I would say addictions that inspire fraud are not always drug addictions or gambling. A good person might see an opportunity to steal and take it to solve a personal problem with the mind of never engaging in such shameful act ever again but stealing without being caught becomes an addiction as seen in my years as a compliance executive.

10. Domestic problems – Domestic problems are home and family problems and are almost always rooted in financial challenges or divorce. According to The ACFE Behavioural Red Flags, 12% of fraudsters displayed this sign.

WHAT TO DO WITH THE SIGNS WHEN SPOTTED

Let someone know to minimize losses and reduce the extent of crime that may occur if it lingers.

Because of fear of being labelled or lack of protection, reporting crimes or suspected fraudulent activity is less common.

However, you can explore:

  1. Writing in a way that your identity will not be easily detected through your writing.
  2. A point-to-point communication link where your call will be directed to a destination, and you will remain anonymous.
  3. Speak to a trusted expert.

You owe your organization, your employers, the society a duty to make known any suspicion of fraudulent activities because it is the right thing to do.

Article Written by Damilola Atiri CFE

Guide: Knowledge of Law, Procurement Experience and The Fraud Examiners Manual.

Author

RABLOWOODS

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