WHK Taylors audit director Phil Sinclair told the Otago Daily Times that fraud remained a major source of financial and reputational loss to New Zealand businesses, yet many organisations continued to believe that it had not happened and would not happen to them.
"In the current financial climate, it is expected that instances of fraud will increase as individuals face pressure to maintain their current lifestyles."
It was expected that an increase in the detection of existing fraud would occur as organisations examined their financial records more closely in order to understand declining results.
Nine Wellington bus drivers were sacked for allegedly stealing thousands of dollars in fares, but they would not face charges if they repaid the money, bus company Go Wellington said.
The drivers were fired over the past three months for stealing at least $20,000 between May and June, The Dominion Post reported.
More than $500,000 had gone missing over three years, until the Snapper debit card system became fully operational this year - exposing the discrepancies between the amount drivers received in fares and the amount they returned to the depot after their shifts.
Mr Sinclair said that was a good example of how a fraud from ongoing activities could be detected if a system changed.
There was no "top 10" list of frauds for employers to look at but they should never say never.
Fraud prevention sought to reduce both the opportunity and the motivation for fraud.
New Zealand research showed that poor internal control remained the major factor allowing fraud to occur.
"Importantly, internal control is also the most common method by which fraudulent behaviour is detected.
Weaknesses in internal controls, if identified by employees or third parties, may be too tempting not to exploit."
Among the things businesses should pay particular attention to were:Implementing cash handling procedures to ensure that all takings were banked.
Ensuring procedures were strong around the use of electronic banking.
Ensuring only goods or services actually received were paid for.
Monitoring the appropriateness of corporate credit card or staff reimbursement expenditure.
Businesses should also have a clear code of conduct, written in English that all staff could understand, Mr Sinclair said.
Too often, businesses were downloading a code off the internet and employees were faced with reading a 50-page document written in such a way that interpretation was difficult.
"You can't hold people accountable when they don't know what is expected of them. You have to make staff aware of rules and procedures."
Employees were a valuable source of information about fraud and misconduct but so, too, were suppliers, who noticed anomalies in things such as payment, he said.
Some organisations had set up fraud hotlines where staff or suppliers could report their concerns anonymously in the confidence they would not be exposed to retaliation or victimisation.
Computer software was available to match payroll data against employee bank accounts and those of suppliers.
Sometimes the results showed that the bank account numbers of employees and a supplier were the same, which could indicate fraud, Mr Sinclair said.
If fraud was suspected, it was crucial that the organisation responded appropriately and that any investigation was handled carefully without compromising potential evidence.
Again, organisations should have a hard and fast rule that alleged fraud would be reported to the police, he said.
Only about 57% of fraud incidents were reported to police and about 17% of organisations allowed fraudulent employees to resign.
"This course of action is disappointing when it is considered that 15% of the fraudsters were found to have had a prior history of dishonesty.
"Given that many organisations do not conduct adequate pre-employment screening, there is a real danger that dishonest employees are being allowed to commit further offences against other employers."
