Prevent Employee Shipping Fraud

by LJM Group

Employee fraud is one of the most expensive liabilities of an organization.

One frequently quoted statistic from the ACFE (Association of Certified Fraud Examiners) reports year after year that companies lose, on average, 5% of revenues to employee fraud. From the minutia of pencils and paper to the monstrosities of accounting or payroll fraud, and data theft, quite frankly, FRAUD is a fact of business ownership.

As a business owner, likely you have dealt with employee fraud, on one level or another. Fraudulent acts drain your company of money, straining your business’s financial position. Embezzlement is defined as “fraudulent taking of personal property by someone to whom it was entrusted,” according to the Cornell University School of Law. If you are running a company that entrusts certain employees to manage Finances or Operations, you may someday suspect that one of your employees may be embezzling.

Not surprisingly, the ACFE has found that smaller organizations “suffer disproportionately larger losses due to organizational fraud,” mostly because they tend to lack the fraud prevention and detection measures that larger organizations have in place. They also report that, the majority of asset misappropriation traditionally occurs in the procurement, payment and expense areas. However, in the world of warehousing, shipping, and logistics, the fraud may be in the form of misuse of the corporate UPS or FEDEX account for personal use, or simply using the account in an unethical way. The fraud may be in the form of creating and using contrived addresses for stealing merchandise, enabling employees to ship inventory excessively at will.

Therefore, it has become imperative to start monitoring employee activities. In fact, most companies already do so. By examining patterns and transactions in these areas, with continuous systems that are driven by data analysis, it is usually possible to identify a wide range of employee fraud schemes.

LJM has designed a series of programs to help mitigate employee fraud specifically relating to inventory and shipping abuse. No longer will regular or unexpected audits be necessary. The LJM tool will do it all, replacing scheduled or non-scheduled audits with perpetual audit intelligence software that uncovers suspicious transactions and conduct.

Being proactive and implementing data-monitoring tools is the greatest fraud prevention effort available to protect your business.


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