Preventing Employee Fraud by Minimizing Opportunity

As defined by the Association of Certified Fraud Examiners (www.cfenet.com), employee fraud entails the use of one’s occupation for personal gain through the deliberate misuse or theft of an employer’s assets or resources. Most businesses do not realize that employee fraud can be a serious threat to business profitability.

“Employee Fraud: Perpetrators and their Motivations” (Thomas A. Buckhoff, The CPA Journal , November 2001), used the “fraud triangle” to explain what motivates employees to commit fraud. Three essential elements are common to all types of fraud schemes: opportunity, pressure, and rationalization. Many employees are under financial pressure and lack personal integrity; consequently, where opportunity exists, fraud often occurs.