Putting Up Fences to Keep Fraudsters Out

By Chrissie A. Powers, CPA/CFF, CFE, CVA

Are you putting up the correct fences to keep fraudsters out of your company? Our investigations continue to show signs that organizations aren't following some simple steps to vet employees in positions of trust. This is extremely important when hiring for financial or management positions such as CFOs, CEOs, or personnel in your accounting department. Once they are hired and through the gate, many of them have access to critical company information such as the accounting records, bank accounts and credit cards, which can damage the company.

Here are five easy steps that you can take to spot the bad apples before they are hired:

1. Verifying education and credentials. Ask for a copy of their high school diploma, college degree and/or their relevant certifications (i.e. CPA license). We recommend using a trusted background screening company to verify dates of attendance and graduation, majors studied, GPA and degrees obtained.
   
   In addition, the Ohio CPA credential can be verified by going to https://license.ohio.gov/lookup/default.asp. You should select Accountancy Board from the pull down and enter the first and last name or the license number. Be sure their status is Active if they are holding themselves out as a CPA. Other certifications may be verified through the licensing authority.
2. Check employee references on resumes or job applications. Are you calling the references the job candidate has provided? We have seen organizations that have never checked their references or past employers prior to hiring the trusted employee. Once a fraud is suspected and we are retained to investigate, often times we contact past employers and find out that they would not have recommend placing this individual in a position of trust due to a past incident. If someone had just picked up the phone prior to extending a job offer, this more than likely could have been avoided.
3. Run employee background checks, both at the civil and criminal level. We recommend running at both levels because they can report back with different information. We have seen employers have a background check run after they suspect improper conduct by a current employee. The background check reveals that the social security number belongs to the employee's spouse and the employee is working under a false name. If the background checks had been run during the interview phase, this employee would not have been hired.
4. Be careful when hiring through recruiting firms. It is important to make sure you are working with a reputable recruiter and that you understand what checks they will be performing before bringing the potential candidate to you. Ask for copies of background checks and other documentation to support the recruiter has thoroughly vetted the candidate and performed the proper due diligence. If your organization performs the proper due diligence, it will allow them to make informed hiring decisions.

Not all fraud can be prevented, but there are ways to reduce the business losses. If you have additional questions or concerns regarding fraud, don't hesitate to contact us at 614.745.5192.

If your organization needs a background check run, contact Bernie Pack with Accurate Information Systems, LLC at bpack@accinfosys.com or 800.295.7109 Ext. 117.

The material in this article is for informational use only, and is in no way intended to constitute legal advice. You should seek the advice of an attorney.