1 in 4 Employees Aware of Fraud Against Their Employer
8 January 2001
Employee fraud is prevalent in the Workplace according to an Ernst & Young study.
Ipsos-Reid conducted the survey by asking a randomly selected sample of 822 Canadian employees
between October 4 and October 15, 2000 about their first-hand knowledge of fraud. The sample was then
statistically to balance the regional and age/sex rations in line with 1996 census data.
This size of sample gives a 95% confidence rating of +/- 3.4 percentage points,
Extrapolating from the poll they concluded that 25 per cent of Canadian employees
(3.2 million) had either committed fraud against employers or were aware of another employee
having done so during the previous year. According to Nick Hodson of Ernst & Young's Investigative and Forensic Accounting
Practice:
"Looking at the stats, for employers it means that you've almost certainly
been a victim of fraud by at least one of your employees."
The news study is a follow-up of "Fraud - The Unmanaged Risk: an international
Ernst & Young survey of employers conducted in May 2000. That study showed that 80 per cent
of Canadian employers reported some degree of employee fraud.
Hodson says that, "The new survey corroborates the earlier data on the
pervasiveness of the problem." Examples of workplace fraud include
creating phony supplier invoices, altering the books to make profit or costs
look better, pocketing cash sales proceeds or taking company property.But, while most
frauds are not dramatic, Hodson believes that they are damaging for both businesses and
governments. "Like most parasites, successful fraudsters don't kill their hosts, they
just drain their blood little by little day by day." He cites one 'unsensational' fraud where
"an employee padded an expense account and took kickbacks from a supplier
draining about $24,000 a year from his employer. Our calculations show that
the business would have had to generate revenues of $10-15 million to pay for
the fraud over its duration."
Curiously, just 34 per cent of employees had actually reported a known fraud but 83
per cent said that they would be likely to. Hodson advocates setting up workplace
hotlines to encourage reporting.
Employees were split on the role of technology with 40 per cent thinking it made
fraud easier and 41 per cent believing that it made fraud more difficult to commit.
There was little distinction between public and private sectors, ranging from 27 per cent
incidence among employees in government, healthcare, construction and service industries
to 23 per cent in finance, technology and other professional sectors.
Canadian Human Resources
