5 red flags for employee theft

The Association of Certified Fraud Examiners just released the 2008 Report to the Nation on Fraud and Labor Abuse. Based on data from 959 occupational fraud cases investigated by Certified Fraud Examiners between 2006 and 2008, this study is an in-depth analysis of the causes, costs and ramifications of fraud in the workplace.

According to the Report, There are several red flags that indicate the possibility that an employee may commit fraud. These indicators consist of patterns of behavior that management must be aware of when trying to detect and prevent fraud in your organization. While not all indicators are listed here, the following five red flags are critical warning signs:

1. Living beyond your means. This is the most common trait found in employee theft cases. The need to maintain a wealthy lifestyle often leads to embezzlement and other crimes.

2. Financial difficulties. Sudden or persistent money problems can lead normally honest employees to desperate acts.

3. A “wheel dealer” attitude. Employees acting in a scheming or scheming manner were often found to have committed fraud. More than 20% of the cases studied involved an aggressor who demonstrated this attribute.

4. Refusing to take a vacation. Often viewed as “the perfect employee,” many scammers refuse to take vacation time because they fear their plan will be discovered in their absence. In fact, this is one of the most common ways that internal theft is detected.

5. Past work problems. Past performance is a good predictor of future performance. If an employee has stolen from your company in the past, it is very likely that they will steal again. The pre-employment assessment is a great way to identify this red flag.

These indicators do not guarantee that an employee is stealing or plans to do so in the future. They are simply warning signs that employers can watch to detect and prevent fraud before it paralyzes their business. Employee assistance programs can help at-risk workers before the problem worsens. For more information on Report, contact the Association of Certified Fraud Examiners at