Only 34 per cent of those who knew of a fraud reported it to a supervisor
Twenty-five per cent of Canadian employees — roughly 3.2 million — have either defrauded their employer or know of a co-worker who has, according to a new study released by Ernst & Young consultants.
The study comes on the heels of an international study released last year which found that 82 per cent of the worst business frauds are committed by employees, with a third of those carried out by employees in management positions.
This recent research into workplace fraud turned the microscope on the employees, asking them directly about fraud where they work.
“If you really want to know what’s going on you have to go to the people who know and the people who know are the ones that are doing it,” said Nick Hodson, of Ernst & Young’s Investigative and Forensic Accounting Unit.
The survey, conducted by Ipsos-Reid, found that the types of frauds being committed by these employees are not sensational but are just as damaging to both businesses and governments.
Employees admitted to taking kickbacks from suppliers, creating fake invoices, altering accounts to make profit or costs look better, pocketing cash sales proceeds and taking company-owned property. Sixty-eight per cent of survey respondents said inflating expense accounts was a major problem, while creating false invoices was deemed less of a problem.
One senior marketing executive defrauded his employers of $24,000 a year by padding his expense account and accepting kickbacks from consultants. Hodson, who investigated the man, said if he had continued at that rate until his retirement, the company would have had to sell at least $10-million to compensate for the employee’s deception.
Of the 822 Canadian employees surveyed, only 34 per cent of those who knew of a fraud said they had reported it to a supervisor. But, 83 per cent of respondents overall said they would likely report a fraud. And having someone in place where employers can report these activities is essential.
“I’m more impressed with the notion that a very substantial portion of the labour force is honest and that they don’t want this sort of thing happening where they work,” said Hodson.
Survey respondents were split in their opinions of whether technology available to employees at work made it easier to commit a fraud; 40 per cent stated technology made it easier and 41 per cent said it had a deterrent effect.
“The popular wisdom would be that technology tends to favour the fraudster because it functions with fewer and fewer hands on and it takes out the checks and balances,” said Hodson.
For employers, the study should be a wake-up call to action, said Hodson.
“The wake up call for employers is that this is happening to you and the only issue you have is to what extent it is happening to you,” said Hodson.
The study comes on the heels of an international study released last year which found that 82 per cent of the worst business frauds are committed by employees, with a third of those carried out by employees in management positions.
This recent research into workplace fraud turned the microscope on the employees, asking them directly about fraud where they work.
“If you really want to know what’s going on you have to go to the people who know and the people who know are the ones that are doing it,” said Nick Hodson, of Ernst & Young’s Investigative and Forensic Accounting Unit.
The survey, conducted by Ipsos-Reid, found that the types of frauds being committed by these employees are not sensational but are just as damaging to both businesses and governments.
Employees admitted to taking kickbacks from suppliers, creating fake invoices, altering accounts to make profit or costs look better, pocketing cash sales proceeds and taking company-owned property. Sixty-eight per cent of survey respondents said inflating expense accounts was a major problem, while creating false invoices was deemed less of a problem.
One senior marketing executive defrauded his employers of $24,000 a year by padding his expense account and accepting kickbacks from consultants. Hodson, who investigated the man, said if he had continued at that rate until his retirement, the company would have had to sell at least $10-million to compensate for the employee’s deception.
Of the 822 Canadian employees surveyed, only 34 per cent of those who knew of a fraud said they had reported it to a supervisor. But, 83 per cent of respondents overall said they would likely report a fraud. And having someone in place where employers can report these activities is essential.
“I’m more impressed with the notion that a very substantial portion of the labour force is honest and that they don’t want this sort of thing happening where they work,” said Hodson.
Survey respondents were split in their opinions of whether technology available to employees at work made it easier to commit a fraud; 40 per cent stated technology made it easier and 41 per cent said it had a deterrent effect.
“The popular wisdom would be that technology tends to favour the fraudster because it functions with fewer and fewer hands on and it takes out the checks and balances,” said Hodson.
For employers, the study should be a wake-up call to action, said Hodson.
“The wake up call for employers is that this is happening to you and the only issue you have is to what extent it is happening to you,” said Hodson.
