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Background Checks to reduce the risk of occupational fraud

Occupational Fraud is defined as a fraud committed by an employee, against his or her employer.

There are 3 types of occupational fraud: asset misappropriation (86% of fraud cases in 2020), corruption (43%) and financial statement fraud (10%).

Types of Occupation Fraud

Asset Misappropriation:

Also known as insider fraud, asset misappropriation involves employees or third parties abusing their position within a business to steal from it, usually through fraudulent activity. Any employee who holds and manages assets for a business could commit this type of fraud, stealing anything from cash, cash equivalents, company date or intellectual property. This type of fraud can range from lying about qualifications on a job applications, to expenses fiddling, to organised crime groups taking advantage of poor processes and control systems.


Corruption can range from “kickbacks” to procurement rigging, and is usually associated with bribery, extortion and conflicts of interest.

Financial Statement Fraud:

Although the rarest of the three, financial statement fraud is usually the costliest for a business. It involves deliberately altering financial statements, for example by overstating assets, expenses or losses, or vice versa. Oftentimes this is not for personal financial gain, but rather to deceive in order to obtain loans or inflate share prices that may not have been feasible if the real financial results were accurately published.

Impacts on Business

The association of certified fraud examiners (ACFE) 2020 global study on occupational fraud and abuse estimates that organisations lose 5% of revenue to occupational fraud each year. They suggest that a typical fraud cases lasts 14 months before detection, and across the 2,504 cases they investigated the median loss per case was $125,000. Crucially, the ACFE has found that a lack of internal controls contributed to nearly 1/3 of occupational fraud cases.

What can be done to mitigate the risk of occupational fraud?

The ACFE study found that 48% of surveyed organisations did not undertake due diligence when hiring, suggesting they did not complete background checks on their new employees. The importance of these background checks is no more evident than in the recent case of Olivia Briscoe, who stole £12k from her new company:

Birmingham Crown Court heard that Briscoe, who had previous convictions and served a jail sentence, knew the boss's wife from a previous job at a coffee shop and had access to company bank accounts, although no background checks were conducted on her.”

How do I complete background checks?

There are many ways to complete background checks, all varying in complexity, cost and resource requirements.

You could choose to complete background checks manually, which would involve running all the legal checks through the relevant regulatory bodies (such as DBS) and then personally reaching out to individual candidate referees, whilst keeping a manual log of the status of each check.

You could choose to outsource the whole process to a specialist reference checking company, which would incur additional costs.

Alternatively, you could use an online tool such as VettingGateway. Using a simple online platform you can complete pre-employment screening, criminal record and credit checks, and any industry specific regulatory checks you might need all in one place. The tool is automated, which means it will chase referees automatically, leaving you to get on with your day job. Contact VettingGateway today to start using it for free.


The information Provided by VettingGateway in this blog was published on the 03/12/2021, all information was relevant at the time of publishing however as our landscape is forever changing this information may not remain valid.

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