Internal Company Theft and Fraud

Fraud Detection

Theft and fraud impacts all sizes of business reportedly costing the UK economy more than £190 billion each year. 

When a company offers an individual a job, a salary is agreed upon and so when it is found that a member of staff is stealing cash or stock it maybe unclear on how to proceed. This is a situation many employers have faced and unfortunately will continue
to face.

 Stealing any type of asset is unacceptable, however the truth is it happens
and business owners should know how to tackle the issue. Staff theft can be
tangible items such as stationery, petty cash, dual booking expense charges or direct
fraud. Intangible assets such as Intellectual Property(IP), client detail and
document files can have a greater impact than tangible items.  Regardless the value, type of theft or motive, this is theft, and it negatively impacts a company’s profit.

Below is a an overview of the key areas of Internal Company Theft and Fraud;

Why Employees Steal

Many forms of theft are where the opportunity presented itself to the staff. Although most individuals know any form of theft is wrong and would be against their ethical beliefs temptation takes over.

Working in an environment where the culture is to help yourself, or known theft goes unpunished will encourage this type environment and behaviour.  Because personal financial issues can greatly impact an individual’s mental health this can often be the cause of breaking morals. A number of staff also report that they feel they ‘deserve it’ either due to working longer hours or feeling undervalued by management.

What Are The Warning Signs Of Staff Theft

There many signs to look out for theft and fraud in the workplace but these alone cannot guarantee it is happening.  Signs could be a sudden or even gradual changes in an employee’s competence or carelessness in their role, change in historic working routines such as starting earlier or staying late, possibly weekend working. Noticing a change in their perceived wealth such as watches, cars, designer clothes. A rise in transaction cancellations or refunds, increases in value or volume of expense claims over time. However, change in patterns could be due to looking after a sick relative. A change in wealth could be inheritance and so legitimate reasons. 

How To Deal With Staff Theft

Everyone is innocent until proven guilty so any suspicions of theft remain just that. Because of this companies must obtain evidence which directly ties staff to a theft or any other criminal behaviour. This could be in a way of computer logs, CCTV or a whistle-blower. Accusations without firm evidence poses many risks as a company could leave itself open to legal action or the theft could stop without possibility of recovery. Raising suspicions to HR, security, or any other designated persons to investigate should happen swiftly.

What Can Be Done To Stop Fraud

Although Company Theft and Fraud will happen where opportunity or personal circumstances change morals, there are active steps to help avoid your company being a victim or identifying an individual. Such steps as a memo on the review of suspicious transactions maybe enough to stop future attempts. Implementing identification methods such as a whistle-blower program, finance system that tracks suspicious entries, or anti-fraud/ fraud detection software will aid in the tracking of transactions and so will also provide proof. Protecting systems from file and data transfer also helps guard against intangible asset theft. Keeping up-to-date policies and procedures with segregation of duties on approvals also key to controlling internal company fraud.  The engagement letter for both new starters and 3rd parties should explain there is a zero tolerance to theft and fraud.  

Confronting Staff

Once proof has been gathered against a staff member of fraud there needs to be a procedure in place to confront them. These should happen in a way of a meeting which includes the proof obtained. A calm discussion should take place with an opportunity for the staff member to respond. That ream of paper taken home may have been for a report that they were working on at the weekend for the company. An explanation for a duplicated receipt reclaimed would be for another staff member who was on holiday so couldn’t reclaim it. Having HR or another impartial person in the meeting is beneficial to ensure there is proof on discussion and agreements.

Useful Links

For support on Internal business Theft and Fraud the following links can prove beneficial:




With the potential financial impact because of business fraud, it should be high on any businesses plan to protect their financial position and reputation. As a business owner is should be clear that theft will not be tolerated and prosecution followed through with. The moral aspects of fraud is with the staff the actual prevention sits with the business owners.

Datplan – 2019

Datplan has been providing cyber security, fraud detection and data analysis services for over 20 years in the finance and insurance sector.