Why Do Employees Commit Fraud?

Employee fraud is not something that anyone wants to come into contact with for understandable reasons.  The harsh reality is, it happens a lot more than we’d like to think, so getting to the root of the problem is essential for making sure that it can be dealt with in a timely and professional manner.  How?  Well, understanding why employees commit fraud is critical to detecting it, so take a look at the popular reasons for this crime and you’ll better understand the problem at hand.

They feel they’re worth more than they’re getting

There are two main reasons why employees commit fraud within their businesses, and the first one is that they are feeling undervalued.  If an employee doesn’t get a raise that they feel they’re entitled to, or they don’t get positive attention from their superiors, they’ll look for another way to get the rewards that they’ve “earned”.  This is why proper appreciation of employees can go a long way for your company as well as employee morale.

They need the money, like, yesterday

This is the other major reason that employees will commit fraud, as you might have guessed.  When they’re in a tight spot, financially speaking, and the circumstances are dire – they can’t feed their family, they need an extra $50 for rent, etc – then fraud stops being a bad thing, and starts being a “not so bad” thing.  After all, desperation is desperation.  In these situations, the employee could be the best one that you have, but a loved one in danger or severe need can make even the best minds and hearts go wild and lead employees to commit fraud.

They have ample time to commit fraud

When an employee has all of the financial responsibilities for a company on his or her plate, the temptation can build up.  After all, who’s going to notice it’s missing outside of this particular employee?  In some cases, it can almost become a game of Risk in terms of how much and how often an employee can steal from a company without getting caught.

They don’t think it’s “big enough to matter”

Fraud doesn’t have to be in big amounts, it can be in something as small as stealing a box of pens or sticky notes.  Whether it’s skimming $50 off the books every six months, or larger amounts at closer intervals, fraud is fraud.  While the employee may not think that it’s big enough to matter, all amounts – no matter how small they are or what form they take – are important to detect and monitor for a company’s well-being. Employee fraud is never a good thing, but understanding where it comes from for your employees can help you to understand how and when it happens, and that will help you detect it when the case does arise.  Education on core concepts is always key to a better workplace, and employee fraud is no exception to this rule.  Contact Palma Financial Consulting at (281) 668-9168 to have a financial accountant review your books, your business and situation and see if money is walking out of your office or how you can prevent it from happening again, or in the future.