Business is booming and you need to hire more staff, but bringing new employees on board is not without risk. Employers should ask themselves how well they know the person they are about to hire, particularly those whose positions entail the handling of financial, sensitive or confidential information.
According to the Association of Certified Fraud Examiners, 40 percent of fraud is carried out by employees in the accounting or operations department. This statistic begs the question: If a company is going to give an employee access to sensitive or financial information, shouldn’t that company also screen those individuals as thoroughly as possible prior to hiring?
There is no magic wand to wave to ensure a perfect hire, but there are several steps companies can take to strengthen pre-hiring screening and verification.
Conduct a background check
Long considered a standard part of the hiring process, more companies are skipping the background check to cut costs. This is a huge oversight, as a background check can uncover critical red flags and help companies eliminate unfit candidates right out of the gate.
Run credit and employment-related checks
Financial troubles rank high on the list of factors that drive an employee to conduct fraud, so a credit check can highlight such vulnerabilities. Employment and education-related verifications are also key to determining honesty about credentials and experience.
Send applicants for drug tests
Another time-consuming expense that is often passed over, drug tests are a proven method for filtering out applicants. Substance abuse is another risk factor for fraudulent behavior, and it can also create other operational risks for a business.
Dig deeper with references
It is important to obtain references from job applicants, but it is even more important to make the most of them. Take the time to go beyond the basic checklist of questions – asking open-ended inquiries and encouraging elaboration is a great way to get a sense of what the applicant is like as a colleague.
Maintain confidentiality and legal regulations
When using these methods to obtain information about applicants, it is critical to adhere to the legal or regulatory precedent in the employment arena, like the federal Fair Credit Report Act or the U.S. Equal Employment Opportunity Commission. There are many employment and hiring related issues subject to litigation, regulation and legislation, so be sure to develop policies and procedures that protect the rights and personal data of both employer and applicant.
Pre-hire verification and vetting is a critical component of a company’s fight against fraud and an important investment of resources. Companies can work with a human resources consulting or fraud prevention partner, like RKL, to avoid confidentiality issues or violations and develop a thorough employment screening process. Learn more about RKL’s fraud and forensic accounting services or contact me at 717.394.5666 or firstname.lastname@example.org.
Contributed by Bethany A. Novis, CPA/ABV, CVA, CFE, a partner in RKL’s Business Consulting Services Group. Bethany specializes in fraud investigation, business valuation and litigation services. In addition to being a licensed CPA accredited in business valuation, she holds designations as a Certified Valuation Analyst (CVA) and a Certified Fraud Examiner (CFE).