Guide to Preventing Workplace Fraud - Chubb Group of Insurance ...

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Cash-diversion schemes range from simple skimming of sales receipts to complex frauds involving: ■ Billing, ■ Payroll, ■ Expense reimbursement, ■ Checks, including alteration and diversion of legitimately issued checks, and ■ Sales and remittances, including point-of-sale “till tapping.” Other common targets of asset misappropriation include merchandise and/or other inventory, equipment and supplies, and even waste, scrap, salvage, or surplus property. Generally, high-value assets that are easy to transport and to dispose of are at highest risk. Prime examples of high-risk assets include laptop computers, which pose the additional risks of confidential data disclosure and possible facilitation of unauthorized information-system intrusion. Experience indicates that virtually any type of asset can be targeted. Company services may also be appropriated. For example: ■ A manager of a construction firm uses “on the clock” company employees to remodel his home, or perform landscaping and/or maintenance work. ■ An administrative assistant uses her employer’s express mail delivery service account to routinely send packages to members of her family in other parts of the world. 12
Fraudulent Financial Statements, Books, and Records The financial statements (internal and external), books, and records of a business may also be targets for fraud. Specifically, they may be: ■ Manipulated to hide fraud (e.g., to prevent discovery of an asset misappropriation), and/or ■ Falsified to accomplish a fraud (e.g., to cause unjustified financial rewards, such as executive bonuses based on falsified financial performance data). Corrupt or Prohibited Practices Corrupt and prohibited business practices include the following closely related concerns: ■ “Side agreements” involving undisclosed rebates or kickbacks, and ■ Bid-rigging, bribery, and extortion. Corrupt and prohibited practices often involve hidden arrangements with customers and suppliers of goods and services to a company. In many cases, these arrangements directly and dishonestly benefit the individual employee(s) involved. 13
Page 1 and 2: Guide to Preventing Workplace Fraud
Page 3: GUIDE TO PREVENTING WORKPLACE FRAUD
Page 7: CONTENTS Introduction .............
Page 10 and 11: focus on prevention, detection, and
Page 12 and 13: The Fraud Triangle What motivates p
Page 14 and 15: ■ Minimization: “I’m not taki
Page 18 and 19: FRAUD RISK MANAGEMENT- LOSS CONTROL
Page 20 and 21: General fraud detection practices.
Page 22 and 23: ■ “Vendor audits,” which typi
Page 24 and 25: company. Checks with identified inc
Page 26 and 27: ■ Investigate Forms W-2 and 1099,
Page 28 and 29: Segregation of duties may be diffic
Page 30 and 31: In many companies, vendor payments
Page 32 and 33: ■ “Vendor audits,” which typi
Page 34 and 35: The above scenario presents a numbe
Page 36 and 37: part of computerized records and ar
Page 38 and 39: software, and color laser printers
Page 40 and 41: Misappropriation of Waste, Scrap, a
Page 42 and 43: Expense Account Reimbursement Fraud
Page 44 and 45: Payroll fraud may involve collusion
Page 46 and 47: ■ Employee correspondence sent to
Page 48 and 49: ■ Design and implement safeguards
Page 50 and 51: ■ Foster a strong “perception o
Page 52 and 53: Many companies require that employe
Page 54 and 55: ■ Callers are asked to call back
Page 56 and 57: ABOUT THIS BOOKLET This booklet was
Page 60: Chubb Group of Insurance Companies

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