Comprehensive Background Checks: Preventing Fraud in Businesses

Comprehensive Background Checks: Preventing Fraud in Businesses

A fraud case is not something businesses easily survive. Beyond the financial loss, the effect on a business’ reputation and on employee’s morale can be debilitating.

Damage to the business image tends to keep away clients and investors, decreasing profit and share price. This, in turn, affects the morale of employees, who are now in fear of losing their jobs. 

What’s more alarming is that fraud cases in Australia are on the rise. In 2017, KPMG’s survey revealed that the total value of frauds from April to September 2016 rose by 16 percent. From a total value loss of $381M in October 2015 – March 2016, money loss to perpetrators rose to $442M.

KPMG’s survey also revealed that:

  • Most perpetrators are business insiders, with 36 percent of cases attributable to management.
  • Forty percent of fraud cases took place over a five-year period before being found. 

Considering that detecting fraudulent activity is difficult and a large percentage of fraud is perpetrated by insiders, the action to minimise the risk of fraud should start from the hiring process.

Minimising Risks from the Start

In PWC’s 2016 Global Economic Survey, it was revealed that some of the most common crimes experienced by organisations include: procurement fraud, accounting fraud and human resources fraud. With the advancement of technology, fraud is now even more complex, widespread and difficult to detect. Preventing it altogether requires extra vigilance. To achieve this, background checks must be a part of your business’ risk mitigation plan.

Particularly, background checks can reveal if:

  • a candidate has a history of fraudulent or other risky behaviour;
  • a candidate falsified information in their resume; and
  • an employee being considered for promotion exhibits risky behaviour.

From unusual terminations to criminal convictions, background checks can disclose events in a candidate or employee’s past that employers must be aware of. Checks may be in the form of National Police History Checks (NPHC), employment validations, litigation checks and media searches.

Protecting Your Business, Employees and Clients

According to the Western Australia Police Force, fraud is the most expensive crime category. It also has incapacitating financial and psychological effects on victims. The emotional response of fraud victims are comparable to those of victims of violent crimes. The most common reactions include: self-blame, shame, anger and isolation.

Businesses have a responsibility to their employees and clients. Organisations must take measures to ensure that the people they hire, retain and promote will not cause harm and disruption to other employees, clients and the public in any way. Background checks, especially National Police History Checks, can help determine if you can entrust a candidate or employee with the degree of trust and responsibility the position entails.

Although a criminal record should not be the sole basis of employment (or lack thereof), a police history check is a significant indicator of a candidate's eligibility as a member of your workforce.

Fast Police Checks of Ruswin Vetting Services provides an online police check service for the states of Victoria, Queensland, New South Wales and more. For questions on our services, browse our page or contact us.

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