Understanding Occupational Fraud in the Construction Industry
In 2018, the Association of Certified Fraud Examiners (ACFE) conducted a global study revealing that the construction industry was the ninth most vulnerable industry to occupational fraud. Unlike other instances of fraud, including email viruses, phone scams, and identity theft, occupational fraud occurs internally. It is often overlooked because the danger of outside threats is more publicized, but this doesn’t mean the effects of occupational fraud are any less significant. If you wish to safeguard your business against fraud, both from external and internal threats, consult an Orlando construction law attorney from Cotney Attorneys & Consultants.
What Is Occupational Fraud?
Occupational fraud occurs when an employee uses their position to misuse an organization’s assets or resources. They do this for deliberate, personal gain, and unless they are caught, it can have a transgressive effect on the rest of the business. Occupational fraud can take place on all levels, from employees to management to executives to owners, but it almost always involves one or more individuals seeking personal gain. Perpetrators will be secretive, which is why many cases of fraud go unnoticed until the numbers stop adding up. If your company is currently suffering from occupational fraud, you can bet that policies have already been breached and money has been siphoned from your business.
Why Does Occupational Fraud Occur?
Although occupational fraud can take place at the employee level and the executive level, ACFE findings purport that employees are more likely to commit fraud. That said, the financial damage resulting from fraud escalates with seniority. In other words, high-level employees who decide to commit fraud are more likely to take a larger piece of the proverbial pie.
Related: What Is Contractor Fraud?
So, what compels an employee to commit the crime of occupational fraud? Generally, stress, illness, debt, or a spouse losing their job provides satisfactory motivation for an individual to steal from their employer. When financial or emotional pressure mounts, it increases stress and affects decision making. An individual who spots the opportunity to take for personal gain may, under stressful circumstances, commit a crime they wouldn’t normally commit. In fact, many employees who commit fraud falsely rationalize that the company can afford to foot the bill for a small loss. However, once they get away with the crime, it only gets easier to keep taking.
In some cases, an individual will only skim a marginal amount of money from a company, but they’ll continue to do so over a long period of time. Eventually, these small stolen amounts accumulate into a much larger payment. This technique is referred to as “salami slicing.” Regardless of the amount of money being defrauded from your company, it’s important to consult an Orlando construction law attorney from Cotney Attorneys & Consultants for assistance handling occupational fraud. As a contractor, you can’t afford to let your bottom line suffer from the actions of those who believe they are entitled to more. You’ve already provided job security, safe project sites, and opportunities for advancement to your workers, don’t let occupational fraud undermine your operations.
If you would like to speak with an attorney from our Orlando construction law firm, please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.