1 | P a g e

ISSUE 2 | VOL 2 | FEBRUARY | YEAR 2017 Employee Fraud…………………… 1

Employee Fraud: The enemy

Amongst us, moving from problem

To Solutions……………………….. 2

Types of Fraud………………….…. 3

Word Search………………………. 4

Upcoming & Recommended

Events ……………………………...5-6

Experts Articles…………………….7

KAW "ESTABLISHING RELATIONSHIPS BUILT ON TRUST"

“A check up a day can keep Employee

Fraud away! Why prevention is better

than cure.”

Employee Fraud is an attempt to commit fraud against a company or organization that the employee is working for. It

is actually the fastest growing and one of the most costly crimes in the world. Many of you reading this article would

have already fallen victim of Employee Fraud or would have witnessed one or more Employee Fraud incidents. If you

have not, you either don't realize you have, or you do not understand the red flags or it is just a matter of time.

Employee Fraud is a major concern for organizations locally, regionally and worldwide. The need to implement and

enhance internal controls in our businesses is more critical than ever. Internal Auditors and HR Professionals, in

particular, play a crucial role in detecting and preventing Fraud during their internal assessment process, recruitment, as

well as, enforcing ethical policies in the workplace. A business can lose millions in revenues to Fraud simply because

employees are not pre-screened properly during his/her interview during the employment process or they are not being

monitored and assessed during the course of employment. Sometimes our businesses encourages Employee Fraud by

simply not putting internal controls or Anti-Fraud Programs in place.

In some cases, the crime may be so small it forever goes unnoticed or turns out to be the catastrophic blow a business

never recovers from. KAW Management Services Limited can help you and your business to conduct and implement

Anti-Fraud Assessments, build Anti-Fraud Programs that will assist you in identifying Fraud Risk Areas and also

minimize or curtail Fraud in your organizations. We are passionate about educating businesses and individuals so that

they can be more aware of the various scams and schemes so commonly carried out in workplace. Billions are stolen

from governments and businesses worldwide every year based on statistics. If someone really wants to steal from you,

they will figure out a way to do so and try to hide it or cover their tracks. Our recommendations are not to cure Fraud,

but if implemented by Boards and Management, they can certainly help to minimize or make it difficult to happen.

Contact us at KAW and we will be ready to assist. Remember that any comments and queries can be sent to us at

training@kawmanagement.com; training.kawmgmt@candw.ag or info@kawmanagement.com or visit our website at

www.kawmanagement.com.

2 | P a g e

“A check up a day can keep Employee Fraud

away! Why prevention is better than cure.”

Employee Fraud can be a major problem for businesses especially small ones that cannot sustain the revenue loss

shock. Undetected Employee Fraud can cause serious financial damage to a business, as well as, reputational risk

and loss in employee morale. There are many different types of Employee Fraud, including misuse of company

assets, corruption, money laundering, embezzlement, to name a few.

Misuse of assets is one of the most common forms of Employee Fraud, because it can come in so many ways. The

use of company supplies for personal use, such as simply creating fictitious debits, submitting false expense claims,

or browsing the internet when you should be working and working with customers and supplies in order to get a

kickback, are just a few. Employers can do a lot to protect themselves against this type of fraud by creating a culture

of ethics, setting the tone from the top, increasing vigilance and security, having proper pre-screening and ongoing

monitoring of employees and reducing the opportunities for fraud occurrence through the implementation of strong

internal controls. Educating employees can also help. In many cases, individuals are seriously unaware that basic

little acts that they are involved in are actually fraudulent.

Corruption may sound like a harsh crime reserved for politicians, but it can be a form of Employee Fraud, as well.

Corruption often occurs when an employee offers discounts, services or preferential treatment in return for personal

profitable gain from an outside individual or business without approval from their superiors and not following

policies and procedures.

Employee Fraud is a serious and costly problem throughout the business world, and can occur within any business

or organization, whether small or large. The Fraud Triangle demonstrates that for a fraud to occur there must be

opportunity, an employee has a motive or under pressure and then they simply rationalize. These three factors

explain how and why employees commit fraud. Employers can do a lot to minimize or prevent Employee Fraud by

attempting to remove the arm of the triangle call “Opportunity”.

KAW Management Service Ltd. specializes in Anti-Fraud Services that can prepare and provide solutions in combating

Employment Fraud. If you need advice, KAW Management Service Ltd. can provide you with superior service to ensure

that your business and information stay secure and safe.

3 | P a g e

Types of Fraud Investigated by the Office of the Inspector General By: Catherine Leahy Scott

Inspector General

In addressing fraud within the workers' compensation system, the Office of the Inspector General conducts

investigations into the following types of fraudulent conduct:

Employee Fraud

Occurs when an employee knowingly and intentionally misrepresents, or causes another to misrepresent a material

fact about an injury for the purpose of obtaining, or helping another obtain workers' compensation benefits to which

they are not otherwise entitled. The misrepresentation must be knowingly made as an inadvertent or unintentional

misstatement is not fraud. The misrepresentation must have been made for the purpose of obtaining or denying

benefits, and important enough to impact upon receipt of those benefits. For example, a misrepresentation by an

employee that they were 25 years of age when, in fact, they were 22 years of age would not be a material

misrepresentation constituting fraud unless the age difference was somehow significant to the claimed injury and to

the determination of workers' compensation benefits.

Examples of Employee Fraud Filing a claim for an injury that did not occur on, or has no relation to the job.

Lying about work status when questioned directly, such as at a deposition or a hearing, while receiving

temporary disability benefits.

Misrepresenting the severity of a claimed injury.

Employer Fraud

Occurs when an employer knowingly misrepresents facts about its employees in order to obtain a workers'

compensation coverage for a premium price that is less than what the employer would otherwise be obligated to pay

if all the facts about its employees were known to the issuer of the policy. Also occurs when an employer knowingly

misrepresents facts to avoid, deny or obtain compensation on behalf of employees, or knowingly lies about entitlement

to benefits to discourage an injured employee from pursuing a claim.

Examples of Employer Fraud Under-reporting the number of employees

Misclassifying employees as independent contractors

Misrepresenting the nature of the work performed by the employee

Misrepresenting past loss experience

Misrepresenting the company ownership

Falsely informing an employee that workers' compensation benefits are only available if he or she has been

employed for six months or more.

Health Care Provider Fraud

Occurs when a health care provider knowingly and intentionally submits a material misrepresentation about medical

treatment afforded a workers' compensation claimant in a bill or invoice that the health care provider presents to the

Board or to the insurance carrier for payment. Health care fraud includes frauds committed by any provider in the

workers' compensation system, such as doctors, rehabilitation counselors, pharmacists, or chiropractors.

Examples of Health Care Provider Fraud Billing for exams of patients who were never examined

Billing for treatment of patients who were never treated

Duplicate billing in order to receive payment from different insurance carriers for the same medical treatment

Billing follow-up exams as "first exams" to receive greater payment from the carrier

Bundling unnecessary medical services with necessary services

Misrepresenting the true code for the medical treatment provided

4 | P a g e

5 | P a g e

UPCOMING

RECOMMENDED EVENTS

6 | P a g e

7 | P a g e

EXPERT ARTICLES

Fraud Mitigation Prevention Best Practices - freddiemac.com

Preventing Fraud Employee Training ... in order to identify potential trends for further review of possible fraud ...

July 2016 Pull for review random QC ...

http://www.freddiemac.com/singlefamily/pdf/fraudprevention...

Financial Transactions and Fraud Schemes

© 2016 Association of Certified Fraud Examiners, Inc.... Analytical review ... Financial Transactions and Fraud

Schemes

http://www.acfe.com/uploadedFiles/ACFE_Website/Content/review/...

Top Ten Reviews - Official Site

Top Ten Reviews is the ... turning your paper documents into digital files and helping manage your employee ...

Identity theft covers more than credit card fraud.

http://www.toptenreviews.com

Employee expense reimbursements: Legitimate or fraudulent?

Employee expense reimbursements: Legitimate or ... routed to the reporting manager for review and...

Of Internal Control & Anti-Fraud Experts

http://www.mncpa.org/publications/footnote/2015-02/employee...

ABC15 uncovers out-of-control waste, abuse and fraud inside federal power agency

ABC 15 Phoenix7 days ago as a little-known agency that has a big impact on tens of millions of people and their

electric bills, experts said. “It’s one of the most important agencies...statements and receipts ...

http://www.abc15.com/news/local-news/investigations/abc15-uncoveres-out-of-control-waste-abuse-and-fraud-

inside-federal-power-agency

Detecting Occupational Fraud in Canada:

Introduction. Detecting Occupational Fraud in Canada: A Study of its Victims and Perpetrators ... trated by an

employee, manager, executive or owner of an. LabeledACFE.com

www.acfe.com/uploadedFiles/ACFE_Website/.../rttn-canadian.pdf

Report to the Nations on Occupational Fraud and Abuse

Median Loss and Median Duration by Detection Method... 25. Source of Tips. ..... with fewer than 100 employees)

was the same as that in- curred by the largest...

LabeledACFE.com

https://www.acfe.com/rttn2016/docs/2016-report-to-the-nations.pdf

What Are the Different Types of Employee Fraud? - wiseGEEK

Feb 17, 2017. There are many different types of employee fraud, including misuse of assets,

Corruption, embezzlement or financial fraud, and worker's compensation fraud

http://www.wisegeek.com/what-are-the-diffrent-typs-of-employee-fraud