HO6051.html -- Screening for Fraud

Internal Auditor

October, 1997, pgs 67-69

Screening for Fraud

LESSONS LEARNED

Managers hire on faith, promote on faith, and are sometimes betrayed by that faith.
Fraud is often perpetrated by those we trust.
An effective employment selection process is truly the first line of defense. Screening
is an often overlooked deterrent for employee theft and fraud.
Perpetrators can be contract employees. Organizations need to screen full-time job
applicants and contract and temporary employees.
Screening requirements can be built into contracts. When relying on contractors to
screen their employees, it may be wise to conduct an audit to ensure that screening
is carried out.
Laws and regulations vary around the world. Background screening should be done
in accordance with the law and the contract. Company attorneys and vendors, such
as screening and credit companies, can provide valuable information in this area.
Companies may be barred from employment due to past convictions, but they are
able terminate for false statement on an application. Also, companies may be able
to deny employment to candidates who are not bondable, and prior criminal history
may make an applicant ineligible.

FIVE KEY INTERVIEW PROCEDURES

Inform candidates up front of the recruiting procedures. If they think you will check they
will tend to be more honest.
Require candidates to complete an application form that includes a signed statement
from the applicant confirming the accuracy of the information provided and consenting
to a background check – and further stating that if the information is found to be false,
that will be grounds for dismissal.
Follow up reviews of the application with a telephone interview. You can handle red flags here.
Ask the right questions. Use direct questions to separate fact from fiction.
Conduct mandatory background checks. Verification is essential to protect against
negligent hiring law suits.