Common Types of Occupational Fraud in Canada

Dealing with occupational fraud is an unavoidable part of having a business. It can come in the form of financial statement fraud, corruption, or misappropriation of assets. If you own or manage a company, you should do all that is necessary to protect yourself and your business from occupational fraud.

What is Occupational Fraud?

Occupational fraud is also called internal fraud, employee fraud, or workplace fraud. It is a broad term that pertains to any fraud that happens in the work setting.

Do you know that there are other common types of occupational fraud besides employees stealing money? Stealing money, supplies, or hours, as an employee, owner, or executive falls under the most common one called misappropriation of assets. Understanding the types of fraud is key to protecting one’s business and preventing more occurrences. This action should start from the top going down to employees. Everyone who is part of a company should understand the consequences of fraud in the workplace so that they can work together in minimizing fraud.

Below are the common types of occupational fraud.

Corruption

Corruption accounts for 40% of reported occupational fraud cases in Canada. In corruption, an executive, employee, or owner abuses his or her position for personal gain. It can go hand in hand with both financial statement fraud and misappropriation of assets.

Examples of corruption include:

  • Product substitution, using counterfeit or cheaper product with lower quality and pocketing the difference in cost
  • Creating false health insurance claims with the help of a health care provider
  • Conniving with a vendor to make create payments for services or goods that were never rendered
  • Kickbacks from business deals
  • Bribery by using company or business funds to benefit another person or company in the name of personal gain

Financial Statement Fraud

Financial statement fraud makes 14% of reported cases of occupational fraud in Canada. It is a type of workplace fraud wherein employee alters cash flow statements or balance sheets to manipulate people’s perception upon seeing them. Motivations for financial statement fraud may range from wanting to keep the business afloat, attain loans for the business, or personal gain and may occur together with corruption and misappropriation of assets.

Examples of financial statement fraud include:

  • Exaggerating the value of an asset
  • Making false sales records
  • Making present earnings seem higher by not reporting expenses until later

Misappropriation of Assets

Misappropriation of assets is the most common type of occupational fraud in Canada and the world. In misappropriation of assets, any member of a company uses his position to steal anything of value.

Examples of misappropriation of assets include:

  • False expense reports
  • Cheque tampering and forgery
  • Submitting false sales to collect a commission on said sales
  • Tampered time sheets
  • Using company vehicles or machine for personal use
  • Abusing company credit card by charging personal expenses on it
  • Theft of intellectual property, services, time, supplies, or cash
  • Paying false vendors as part of purchase order schemes

Protect Your Business from Fraud

The effects of small-time fraud can accumulate into huge loses for a business. Some businesses lose a significant chunk of money to fraud and end up closing down. It is important for everyone to understand that fraud can cost everyone their livelihood. If you need help protecting your business from fraud, do not hesitate to contact us at Haywood Hunt. We’ll be happy to discuss with you how our private investigation services can help you to uncover fraud as well as minimize its occurrence in your organization.

 

Common Methods of Restaurant Theft

Restaurant owners can lose profit in a number of ways, and the most common is often due to the tactics and scams that employees use to engage in restaurant theft. Dishonest employees steal not just from restaurant owners but also from customers. Knowing what they do to commit restaurant theft will allow restaurant owners to reduce opportunities for the most common methods of restaurant theft shared below.

Overpouring Drinks or Giving Drinks for Free

Waiters and bartenders can sometimes overpour or give away free drinks to get better tips from customers. Beverages are expensive and often bring in more profit margin than the food served. This means that letting waiters and bartenders get away with this can result in a huge loss for the business.

Eating Without Paying and Stealing Inventory

While some establishments do provide free meals to employees, a careful accounting of what was eaten should be noted to have a real record of what was consumed and maybe save money. When this practice is too lax, some employees can make it a habit to simply not report what they eat and encourages them to go as far as ‘shop for free grocery’ in the restaurant’s pantry to take home.

Not Reporting Food Wastage

Kitchen staff who don’t report food wastage or deliberately order more than needed with the intention of pocketing the excess are stealing from the business. Even having too many returned dishes or voided-out items can rack up cost although there may be no intention of causing mistakes in order to have an excuse to take some items home. This can also cause problems with inventory and really affect profit.

Fraudulent Tip Adjustment

Because credit card tips on bill receipts are entered to the POS system manually, some waiters may take advantage by adding a dollar or two for every transaction. This small-scale scam can accumulate huge amounts of ‘extra tip’ over a period of time, not to mention it is really straight up stealing.

Pocketing the Cash Difference when Voiding or Comping Items

This type of scam may not be easy to detect because the customer and the restaurant are both truly left in the dark by the server or the person manning the cash register. In this scam, the customer is charged the right amount for the food served but the server then voids an item or two from the ticket and keeps the money paid for those items. For example, the total bill is $49 and the customer hands over $50, telling the cashier to keep the change. The fraudster then voids an item worth $17 so the total sale reflects only $32 and not $49, the cost of the voided item is pocketed by the fraudster. The fraudster makes easy money, the customer has no idea it happened, and the restaurant basically served a free item. This is usually detected after a thorough accounting of items served and the items listed in the final sales report but this is near impossible to do without a good POS system. The same goes for the wagon wheel method but the difference is that the wagon wheel scam goes through several bills.

While a restaurant’s management can educate employees about how the various restaurant theft methods shared above can hurt everyone as a whole, the fact remains that fraudulent people will still act out of selfish reasons. It is best to have a system in place that flushes out wrongdoers and can detect problems early on. Talk to us at Haywood Hunt to inquire about how our private investigation services can benefit your restaurant business beyond workplace investigations.

Why You’re Vulnerable to White Collar Crime

white-collar-crime-investigations

Why indeed? And what’s white-collar crime? Do you know that white collar crimes affects more people on a daily basis than all the thefts, murders, and other ‘violent’ crimes put together in our present society?

Whoa!

Let’s talk about fraud. Fraud is everywhere, and everyone is very vulnerable. It ‘rapes’ and it ‘hurts’. It’s also brutal and relentless; but then, it is one of those things which people are not so effective at noticing, even when it happens right in front of them!

So what’s white-collar crime and why is it so serious?

Let’s Talk About White Collar Crime

Think about this, each time a corrupt public official or shady businessman commits an act of deceit, it’s not just a one or a few people getting affected. We’re talking of thousands here! Millions even!

That’s what white collar crime is all about!

It is about someone committing fraud on a small or big scale but not obvious or clumsy enough to make the police go after them or notice them.

…and that’s why it is so easy to let their acts slide (for the most part). After all, what’s a few white lies? What’s a $0.05 price increase per pill or per kilowatt hour? What’s a few mistakes done over and over and over again? A little padding of expenses won’t hurt the company (or whoever), right?

We let things like the above examples go by unpunished because it is so easy to shrug acts like these as a ‘normal’ part of human condition. Who are we to judge someone when we are all vulnerable to temptation? Can’t we just forgive and give the other cheek? That’s what nice people do, right?

The Vulnerable Mindset

Do you know that people with ‘criminal minds’ can see through someone with a vulnerable mindset? That it’s unbelievably easy to ‘go for the kill’ when someone is simply asking for it?

That’s how white-collar criminals sees things. Naïve and nice people are prime targets. They’re ‘easy pickings’, more so if they have an exploitable weakness.

What’s that?

Being very understanding is an exploitable weakness. Being easily swayed is another exploitable weakness…same as being too trusting.

Have you ever been taken for a ride? Pranked?

If yes, and yes, then it might be time to take a long hard look at how you handle yourself, because this means you’re easily taken advantage of.

So how does this relate to white-collar criminals?

The White-Collar Criminal Mind

White-collar criminals consider your morality, needs, good nature, ethics, desires, and humanity as weaknesses which can be exploited and used against you. They use a potent combination of deceit and persuasion to get what they want. That makes them fraudsters; hence, the term white-collar criminal.

Ouch! Sounds familiar?

What you need to know is that the white-collar criminal is in for the long con. They will make you like them with a combination of charm and deceit. In fact, you’ll like them so much it will be difficult to expose them for who they are.

You see, a white-collar criminal can be generous, nice, and even do ‘good deeds’ – but all with an ulterior motive. Think of it as someone going on a date with the intention of drugging the date after gaining a bit of trust. That’s how it is, only a lot more subtle and really for the ‘big heist’.

What You Can Do

Don’t be a victim. No matter how nice you think someone is, if you feel something is off with that person, distance yourself and try to look at the situation with an objective eye. Better yet, ask a professional or a trusted friend.

Don’t think that the threat of punishment is enough to deter people with a nasty endgame. If caught, they will say sorry, act repentant, and make you feel that you’re being too harsh on them. It’s a never ending cycle and you being taken for a ride just won’t stop unless you stomp your foot on the brake.

To Sum it Up…

If someone is making you doubt yourself or your gut feel of that person is not jiving with what you see, it is best to investigate and hold off trusting that individual (unless you’re family, but private eyes can help with that as well).

Hey, if you want answers, we’re here. All it takes is a phone call and you’ll finally have the answers you want. Remember, white-collar criminals are good, but having a good (private) eye to look out for them is wayyyyy better!

If you are looking for a private investigator in the Toronto area, give us a call today!