Employee fraud occurs whenever an employee deliberately lies to, steals from, or deceives a company in order to obtain some type of compensation or benefit for themselves. While it may seem unlikely, employee fraud is a rather common occurrence. In fact, research by the U.S. Department of Commerce found that one-third of corporate bankruptcies in the United States are due to employee theft. Globally, employee fraud attributes to a loss of 2.9 trillion dollars each year.
Types of Employee Fraud
There are different types of employee fraud – three of the most common types being theft, embezzlement, and payroll fraud. Theft happens when an employee is stealing money, resources or property from a company.
Embezzlement happens when accountants in charge of a company’s financials are actually stealing money from the company.
Payroll fraud occurs when employees illegally update their timesheets to reflect that they are working when they are not, thus getting paid for more work than actually done.
Using a CMMS to Reduce Employee Fraud
Employee fraud can be a hard thing to monitor and detect. However, using a Computerized Maintenance Management System, or CMMS, can help immensely. By offering management features for assets, keys & locks, timesheets, and work orders – as well as approval workflows and access rights capabilities – a CMMS empowers you to put in place the necessary protocols and checks and balances that will prevent major employee fraud within your company.
Read on to learn more about the specific CMMS features that help reduce employee fraud:
Asset Management Prevents Employee Theft
Employee theft often occurs in the form of small, consistent acts of stealing different types of company supplies. This happens because companies do not have an organized system where they can track the information and status of all of their assets and inventory.
The asset and inventory management features that a CMMS offers help companies track and monitor all of their stock at any time and from anywhere. This way, companies know what items they have and what should be accounted for as well when something is missing – no matter how small. As a result, small, consistent thefts can be picked up on before too much damage has occurred.
Having information stored on major assets can be helpful as well in the case of a major theft. A CMMS stores important information like who has access to the asset, who last worked on the asset, and what the personal details of the asset are such as make and model. This can help narrow down who in the company or which contractor may have stolen the asset, and provide critical details needed for a police report.
Key Management Ensures Greater Security
Oftentimes, employees and contractors have keys to their company’s buildings in order to use the premises to complete their jobs. However, without a proper key management system, this means that there is no tracking of who has a key and which areas are being accessed at what times. This is a great invitation to a breach of security by an employee who intends to commit some sort of fraud by accessing an area at inappropriate times or when it is prohibited.
A CMMS offers complete key management software capabilities so that you can assign specific keys to an employee or contractor. Within the CMMS database, you can see which keys have been issued to which employees, along with which objects/areas are unlocked by each key. Keys can be returned and unassigned at any time, and the history of all key assignments will be maintained in the system.
Companies can even use a CMMS to set up a key portal through which employees and contractors can request the keys they need, and then use the keys and return them all under the supervision of the facility manager running the portal.
This way, there won’t be any chance for fraudulent activity, such as an employee breaking into the supply room late at night because they were never asked to return the key they once had to use on the job.
Timesheet and Work Order Management Prevents Payroll Fraud
Without the right protocols in place, it can be all too easy for employees to pad their work hours in order to get paid for work they are not doing. But using a CMMS to set up proper timesheet and work order management systems can help stop payroll fraud in its tracks.
With timesheet management software features offered by a CMMS, employees can be required to enter their work hours, sick time, vacation days, and breaks into the system regularly and frequently. Task management features can be used to assign specific employees different jobs, and see how long it takes time and whether they should be delegated more or less work.
The work order management software features of a CMMS can help companies prevent third-party contractors and technicians from identity and payroll fraud as well. Managers can store security and insurance information on contractors within the system to ensure they are hiring legitimate workers.
They can then assign work orders to then contractors, who upon carrying out a service job will be required to click a button that will track when they start and finish their work, and how long the work took overall. A CMMS also has GIS capabilities, which means that managers can track the location of contractors as they are completing the service work.
This means managers can make sure their contractors are getting their work done when and where they say they are performing service, and it can also prevent unnecessary labor overtime.
Access Rights and Approval Workflows Keep Employees in Check
Companies can lower the risk of employee fraud such as embezzlement through access control and monitoring protocols. A CMMS helps managers delegate the necessary access rights and approval workflows so that every business process – especially those in financials and accounting sector – has specific checks and balances in place.
With a CMMS, each employee can be assigned different levels of access rights. This way, there is no such thing as a one-size-fits-all type of log-in, where employees are accessing information and functionality within certain areas of the business operation that they are not supposed to be involved with.
Further, with proper approval workflows established in the CMMS, there will always be multiple eyes on each process and transaction in the company so that no incorrect and fraudulent activity goes unnoticed.
An accountant can submit an action or item within the system, but the CMMS can be configured so that it must first be approved by upper management before being finalized. History of all transactions and their details can be accessed at any time as well, so that managers know who is doing what in the system at all times.
Employee fraud is a serious, prevalent issue that can put businesses at major risk for bankruptcy. That’s why it is essential to establish protocols and monitoring processes that can catch fraudulent behavior in its tracks.
A CMMS offers many features that can help companies put checks and balances in place to prevent employee fraud. These features include asset management, timesheet management, work order management, and configurable access rights and approval workflows.
Contact us today to learn how a CMMS can help your company prevent employee fraud.
Schedule Your Free Demo
A 30 Minute Demo Can Save You Thousands
What are you waiting for?
Click the button below to schedule your free demo!