Detect Fraud with Employee Data Monitoring Tools

Occupational fraud can be a devastating blow to company revenue, and the longer fraud persists, the greater the loss. Yet, according to the Association of Certified Fraud Examiners, fraud schemes go unnoticed for 18 months on average, causing sometimes irreparable damage. The good news is that there are methods companies can use to detect fraud earlier. Implementing proactive data monitoring and analysis typically results in detecting occupational fraud in half the time, cutting median losses by up to 54%.

Technology is the problem and the solution

Most employee fraud schemes depend on technology and access to company data. Therefore, monitoring tools that track employee use of email, the Internet and corporate technology platforms, such as enterprise resource planning (ERP) systems, can help your company detect fraud schemes sooner. For example, if an employee creates a shell company to receive fraudulent payments, excessive maintenance of the vendor master file by that employee should trigger a red flag.

A number of detection solutions exist. These include relatively simple platforms that allow you to monitor email and Internet access for questionable activity. Also available is software that can, for instance, capture and analyze the number of emails sent per day and systems accessed per employee. Such technology can also notify you of unusual activity — for example, if employees access servers outside of regular business hours or download large volumes of sensitive company data.

Notify employees

Regardless of the type of software you adopt, make sure you notify employees that you intend to monitor their technology use. Describe in specific terms the extent of the oversight and how you will use the information gathered. Update your employee handbook to reflect any new policy provisions and ask employees to acknowledge receipt. Simply knowing they’re being watched will discourage many would-be fraud perpetrators.

Contact us

If you have questions about protecting your business from fraud, need help finding effective monitoring tools, or if you suspect fraud in your organization, JLK Rosenberger can help. For more information, call us at 818-334-8623 or click here to contact us.

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