Stories abound of unsuspecting organizations that never knew they were being defrauded until they’d suffered damage in six or seven figures. Often these disheartening tales involve long-serving, trusted employees – who, it turned out, couldn’t be trusted after all.

What can HR do to help keep fraud at bay? You’re probably not in charge of Security or Loss Prevention. But according to corporate fraud consultant John Hall, the single most important anti-fraud measure an organization can take is right up HR’s alley – a strong, clear policy on fraud.

Why is a fraud policy important? After all, everybody knows fraud is bad.

Here’s why: Most employees are basically honest, until and unless they come under financial pressure to steal, or are handed a golden opportunity. At that point, if you haven’t exerted counterpressure, they may go over the edge. At that point, they’ll want to tell themselves that what they’re doing is really okay: “Nobody around here really cares. It’s not hurting anyone. I’ll bet everyone else is doing it.”

A well-publicized fraud policy exerts that counterpressure by telling employees – as well as contractors, vendors and other parties – that you take fraud prevention seriously and expect them to do so, too.

Policy points
Your fraud policy should state, at a minimum, that the organization will:

  • expect all employees to report any suspicious activity that looks like dishonesty or fraud
  • expect managers, and others as appropriate, to recognize and detect fraud in their sphere of influence
  • introduce/maintain necessary procedures to prevent fraud
  • investigate all instances of suspected fraud, report them to the appropriate authorities and assist the police in any official investigation, and take steps to recover any misappropriated assets.



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