CORPORATE FRAUD AND EMPLOYEE THEFT: IMPACTS AND COSTS ON BUSINESS

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ABSTRACT:

Corporate fraud and employee theft can affect almost any type of business in today's business environment. There are many different forms of fraud and theft that can impact the business results and reputation. Business culture, ethical strategies, and business activities can all have direct relations to how an employee or a group of employees have the opportunity of creating scenarios that result in negative business impacts. Impact costs to the organization can be both direct and indirect costs to the business, its employees, and its shareholders. This research also looks at ways that businesses can improve their structure, strategies, and policies to reduce these fraudulent and theft incidents.

Keywords: Fraud, employee theft, segregation of duties, internal controls, prevention, culture, impact costs, ethics, ethical behavior.

INTRODUCTION

Unfortunately, corporate fraud and employee theft within businesses today are not uncommon circumstances. These activities can create far reaching impacts and effects on the business and have substantial impacts on the cost performance metrics of the business and the overall morale of the employee workforce. These affected businesses can carry the weight of the "bad decisions" and unethical practices of a few associates for many years. A person can barely go a day without hearing or reading a news article that describes some type of activity that occurred by a business or its associate that questions one's ethical behavior practices. There are varying statistics of the costs that business bear due to employee theft and fraud, but in 2014, the amount ranged from $20 to $50 billion dollars (Foley, 2014). The cost, however, goes well beyond the total dollar value of the fraud or theft activity. The impact is also felt on overall company morale, especially the team morale of the involved associate. Activities such as these also cause other business and suppliers to question the practices of the "injured" company as well. Questions are raised about the ethical behaviors of the business as a whole. Only time and consistent performance and results can improve and remove the tarnish from the reputation of the affected company or business.

There are many types of corporate and employee fraud that affect business of all sizes and all types. The fraud and theft can come in many forms - actual...