Globalization and digitization increasingly offer space for white-collar crime. According to the KPMG study “Economic Crime in Germany 2012”, the annual damage in Germany amounts to an average of over 300,000 euros per affected company. One in four German companies fell victim to white-collar crime cases in the past two years.
In 48 percent of the cases in German SMEs, their own employees became delinquents.
According to the KPMG study and the current study (2014) “Criminal Risks in SMEs – Dangers, Damage and Prevention” by the F.A.Z. Institute, forsa and Result Group, theft, embezzlement, fraud and embezzlement are among the top offences in German medium-sized companies.
The business sectors most affected by white-collar crime are sales (50 percent), warehousing/logistics (31 percent) and production (28 percent).
At 6 percent, the area of human resources/human resources is one of the areas in which comparatively fewer white-collar crimes are committed.
Nevertheless, human resources is not spared from white-collar crime. Processes that are particularly at risk are admissions, time recording, payroll accounting, payment and resignations as well as the associated topics of personnel master data and reporting, among other things.
Fictitious employees, falsified working hours or manipulated wages and salaries are the main forms of criminal activities in human resources.
For example, it happens that employees create fictitious employees, assign them monthly payments, which ultimately improve their own account. It is only years later that it becomes apparent that this employee does not even exist in the company, because the managing director of a fast-growing medium-sized company had taken a closer look at the payment proposal lists for payroll accounting.
The decisive factor is the consistent implementation of an internal control system, which uses technical and organizational measures and controls to ensure that valid laws and regulations are complied with. The internal control system is often integrated into risk and compliance management.
The basic principles of an internal control system are transparency, the four-eyes principle, separation of functions and the principle of minimum information.
An employee in human resources should therefore not combine too many access rights and roles. A lack of segregation of duties can be a hotbed for white-collar crime.
To safeguard the payroll accounting process, the following control activities should therefore be carried out, among others:
- Ensuring segregation of duties through IT authorization concept, guidelines and procedural instructions; Separation of data collection (payroll-relevant) and preparation of payroll accounting
- Regular data synchronization between billing and time recording systems
- Validity check
- Checking personnel master data for anomalies (bank details, etc.)
- Ensuring the correctness of wage and salary earners through regular coordination with the department
- Check for double payouts
- Controlling payments over time (remuneration, overtime, deductions) and checking for irregularities
- Payment of bonuses only on the basis of appropriate documents
Indications of criminal acts are, for example: Changes in employee behavior, conflicts, high overtime account with low utilization, payment in cash, identical bank details for different employees, budget deviations in personnel costs, etc.
A combination of internal control measures as well as the identification of risk factors and early warning indicators forms a good prevention to protect against white-collar crime in the company.
According to the study by the F.A.Z. Institute, forsa and the Result Group, 42 percent of the companies surveyed expect an increase in external white-collar crime by 2016. Only 24 percent assume that the number of internal company cases will increase.
Have you already had experience with white-collar crime in HR management? We look forward to your comments.
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