Mitigating fraudulent activity during and post COVID-19

09 April 2020

For many organisations, the current operating environment is consumed by managing the response to COVID-19 and the ultimate impact this could have on long-term outcomes.

In these challenging times, it’s essential to be mindful of the heightened risk such environments present for criminal activity, misconduct or wrongdoing in the workplace. When business is interrupted, and staff are decentralised from their supervisors, it is harder to monitor all interactions and oversee staff activity. With many staff suffering loss of employment or reduced hours in the current climate, it is not uncommon to see the emergence of opportunistic and fraudulent activity due to financial stress.

Unfortunately, these unprecedented times may also bring with them reports of wrongdoing in the workplace, such as claims of misconduct towards an employee, including bullying, harassment matters and intellectual property breaches.

Organisations are likely to assess their financial viability during this time, with a review of historical finances to reduce liabilities and an closer look at expenditure. This activity can often lead to the discovery of already committed workplace fraud.

What types of fraudulent and misconduct activity are we witnessing?

There are eight types of incidents we have seen an increase in amongst our clients:  

  1. Timesheet and leave fraud
  2. Financial fraud
  3. Unauthorised access/disclosure of confidential information
  4. Cash theft (via fraudulent creditor and payroll schemes)
  5. Fraudulent application for loans and debtor financing
  6. Cyber breaches
  7. Code of conduct breaches
  8. Bullying and harassment claims.

Some organisations are also experiencing a limited capability to manage and conduct investigations internally. These types of matters need to be actioned immediately or in a timely manner, as they will likely have a further detrimental effect on your organisation if left idle.

Additional considerations to be aware of 

With an abbreviated fiscal year from a sales perspective, there will be added pressure to reach quotas in many cases. Employees may be tempted to cut corners, which could lead to corruptions issues, misconduct, theft of trade secrets, or manipulation of financial records. In addition, organisations need to consider external threats such as seeking payment for goods or services not received, theft or misappropriation of intellectual property, company property and stock. This also includes the use of company credit cards and ensuring your organisation has a policy in place to manage and monitor misuse.

Now is the time to prioritise investigations to mitigate incidents such as those outlined above from occurring. If certain investigations arise due to business interruptions presented by the COVID-19 pandemic, insurance policies may cover the costs incurred. We highly recommend all companies examine their insurance policies during this time.

Organisations should examine their acceptable use policies for corporate-issued devices and implement such policies if they do not currently exist. If employees are using personal devices, organisations should consider how they protect confidential information that may be stored and determine their ability to access information remotely, should an investigation be necessary. All policies should be circulated to ensure employees have access to and are using company systems appropriately. 

BDO can assist with your fraud and investigation needs

 Should you wish to discuss how your organisation can approach fraud challenges in today’s operating climate, or if you have a matter you think requires action or investigation, please do not hesitate to contact a member of BDO’s Forensics and Investigations team. We will ensure the necessary processes and integrity of complaints and investigations are maintained for your organisation.

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