Occupational Fraud: Checklist For Employee Background Checks

It’s no secret that not every person you hire will be the right fit for your company. But what if you hired an employee who was completely unqualified and lied about their skills and experience? What if they had been previously convicted of theft or fraud?

While it is crucial to always vet potential hires before extending an offer, it can be even more crucial to ensure the people you hire are who they say they are and have not been found guilty of dishonest acts in the past.

This article will discuss what constitutes occupational fraud and how to protect your company against hiring fraudulent employees.

What is occupational fraud?

The average company loses 5% of its annual revenue to job-related fraud – ACFE.

When we think of fraud, our minds usually turn to shady dealings such as cheating on exams or swindling someone out of their hard-earned money.

But what about something a little more every day, like falsifying your job application, stealing office supplies, padding expense reports to cover personal expenses, or using company time to play on social media platforms?

All these actions could be considered “occupational or workplace fraud” and can impact your company’s bottom line.

According to a study by the Association of Certified Fraud Examiners (ACFE), the average company loses 5% of its annual revenue to job-related fraud. 

To put this into perspective, for a company with $1 million in annual revenue, occupational fraud could cost them as much as $50,000 annually.

Workplace fraud can take many forms, from asset misappropriation to financial statement fraud and everything in between. The common thread, however, is that these acts can impact your organisation’s profitability and, worse, lead to reputational damage and costly litigation.

Do all companies need to carry out screening procedures?

78% of job seekers lie during the hiring process – CNBC

The simple answer is yes.

As organisations emphasise ensuring a safe working environment for employees and customers alike, they are becoming increasingly aware of the potential for fraud and the dangers it poses to their company’s reputation and finances.

While it is true that not every company has the resources to conduct background checks before hiring a new employee, it is important to remember that the time and money saved by not hiring fraudulent employees far outweigh the cost of conducting background checks.

That said, there are ways to make the process more cost-effective without compromising on the results’ quality.

For example, outsourcing your background checks to a reputable third-party provider will save you time and money — and eliminate the need to invest in expensive technology or train staff to carry out the checks in-house.

A reputable provider also ensures that your employees — and applicants — are vetted according to internationally recognised standards and best practices.

What’s more, through regular background checks — whether as part of your annual HR review or in response to specific situations — you can continuously check the suitability of your employees for their roles, identify any red flags early on and ensure the security of your company’s assets.

Checklist for employee background checks

Before extending the job offer to a potential hire, you must run through these steps to ensure they are exactly who they claim to be:

#1. Hire a reputable employment screening firm to conduct background checks on potential employees. They have access to tools that will give you a comprehensive overview of your candidates’ work history, education, criminal background and other details to help you make an informed decision.

#2. Review applications carefully to determine if candidates are honest and forthcoming with their qualifications. Look for red flags, such as exaggerated job titles and work experience. Remember that your applicants aren’t necessarily lying when they state certain skills they don’t have — they may not know how to represent their work on paper.

#3. Conduct reference checks with previous employers, co-workers, and clients to confirm that candidates provided accurate application information and learn more about the projects they have worked on. Ask for detailed feedback on the candidate’s performance as an employee and any issues they may have encountered in their previous positions. This can help you uncover any concerns before making a final hiring decision.

#4. Verify the candidate’s credentials and education by reviewing state-issued licenses, certifications and academic records. It is also a good idea to call schools directly to ensure your candidates attended school and earned a degree. The Federal Road Safety Corps (FRSC) portal is an excellent place to start for driver’s license verification.

#5. Run a credit check to learn more about a candidate’s credit history and financial status. Remember that this information will not tell you if a candidate is likely to steal from your company, but it can give you valuable information about their financial situation. It can also help you avoid making a bad hire who is not financially responsible enough to do the job.

#6. Conduct a thorough interview to learn more about the applicant’s qualifications and determine whether they fit your company’s culture well. During the interview, you should ask questions that will help you assess how qualified the candidate is for the job and how they might fit in with the rest of the team.

Are you protecting your people and assets?

Conducting comprehensive background checks and verification can protect your company from lawsuits for negligent hiring, employee theft and workplace violence while ensuring you make better hiring decisions by attracting top talent to your organisation.

As Nigeria’s leading background checks and verification services provider, we pride ourselves on providing the most accurate and reliable pre- and post-employment verification services.

Whether you’re an employer looking to verify applicants’ credentials or conduct due diligence on potential business partners, or an individual looking to vet domestic staff, our verification services take the guesswork out, build trust, and ensure you make the right hire every time.

Protect your people and assets, schedule a consultation with us today.