There are a number of common signs that we may see when someone is engaged in financial fraud within a company. Tracy talks about the behavioral red flags for fraud in this video, which are also summarized below:

Situational pressures that may lead to fraud can include:

  • Personal financial problems, such as high debts, bankruptcy, child support obligations, spousal support obligations, or investment losses
  • Family or relationship struggles, especially if they involve money
  • Instability or emotional trauma in one’s personal life
  • Significant illness, leading to time away from work or substantial medical bills
  • Addictions, such as alcohol, drugs, or gambling
  • Criminal background, which may suggest dishonesty, but may also create difficulties in obtaining and sustaining employment
  • Chronic legal problems, which can be expensive and time consuming,
  • Infidelity, which involves dishonesty and requires funds concealed from the spouse

Personal or behavioral red flags that might indicate the involvement in financial fraud include:

  • A lifestyle that exceeds the known income or an obvious change in one’s lifestyle
  • Financial difficulties
  • An unusually close association with customers or vendors
  • A wheeler-dealer type of personality
  • Excessive gambling or use of alcohol or drugs
  • Perceived inequities or unfairness at work
  • Overly protective of one’s work, responsibilities, and documents
  • Chronic dissatisfaction with work or personal life
  • Resentment of superiors
  • Unusual desire for personal gain
  • Weak personal code of ethics
  • Frequent rule-breaking or repeated attempts to beat the system
  • Change in work habits (coming in early, staying late, attempting to be alone at the workplace)
  • Reluctance to take vacation time or be absent for more than a day or two at a time
  • Rationalizing unethical behavior
  • Change in behavior patterns

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