New employees don’t know your internal systems well enough to commit significant fraud. Long term, valuable employees know how to bypass your internal controls. Is Your Employee the Same Person You Hired? Employers (including law firms) need to conduct post-employment background checks on all employees.
Case Study: It’s sad when bad things happen to good people. In this case, a good person was an employer who made sure to conduct background investigations on new employees. However, he missed the boat when he overlooked the benefit of conducting post-employment investigations, and that’s when disaster struck. An employee who had worked for the business for almost 11 years stole $140,000 from the employer.
Result: shock, distress, and a valuable lesson learned, but a little too late.
If you think this couldn’t happen to you, think again. It can happen to anyone more easily than you may realize. When you hire a new employee, they don’t know anything about your business or any of the vulnerabilities that exist. Even if you conducted a thorough background investigation, and even if he or she is a sterling employee, anyone can be tempted, and for some people, the temptation is too much to bear.
An employee who has worked for you long enough to know intimate details of your business operations can do more damage than someone new to you and your business. The truth is that unless you check up on your employees you never know what is really going on in your own business.
A post-employment investigation is the best tool you have to check if your employee is still as worthy of your trust today as they were when you hired them. The Association of Certified Fraud Examiners (ACFE) recommends this.
No one stays the same. The circumstances of our lives evolve constantly, and some employees change dramatically during their employ. Child pornography, drugs, internal thefts, ethics violations, fraud, financial crisis and abuse of authority are just a few things that employees can get involved in AFTER they’ve been hired.
UCMJ Investigations can help you proactively protect yourself by identifying troubling changes in employee circumstances and behavior. We conduct comprehensive checks of financial, property ownership and credit reports to let you know if the person has filed for bankruptcy, has been evicted or foreclosed on or has had issues with loans or credit cards. Such financial hardship is often a precursor to internal fraud, and a formerly honest employee can decide that stealing from the company is the only way out of a financial hole. A long-term employee has the advantage of knowing your system so well that it can take longer to detect internal fraud.
We recommend that business owners and managing partners conduct post-employment investigations every two years and include employees in higher-level positions. Employees in CEO, CFO, and other executive positions often commit fraud undetected for long periods of time because no one suspects them and because they have access to sensitive information, procedures, and passwords.
It can be extremely difficult to see changes when you are up close and have personal relationships with your employees. No one wants to believe it could happen to them. Our experienced investigators want to help you protect your business and your honest employees with knowledge of how your employees have changed while working for you and how those changes can affect your business. You benefit from our objectivity and our commitment to uncovering the information you need to know.
Call UCMJ Investigations at 501-515-2868 for more information on a post-employment update. We can help you protect the business you work so hard to build.
** If you have a case and are not sure if an investigator can help or contribute to your case, contact us for a free review. **
(While this issue may not directly be related to current services offered by UCMJ Investigations, the issues are relevant to the continued viability of your legal firm. The articles derive from our archives and are presented as a public service.)