Background Investigations – Points to ponder

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Indiaforensic Media
Indiaforensic Media
Forensic Accounting in India started with one word - Indiaforensic.

The biggest asset of any corporation is its people. They could also turn out to be its biggest liability as well, if not vetted properly and bad hires creep in due to systemic inefficiencies. Increased trends in employee frauds are a testimony of our poor background vetting standards. While background vetting is not a panacea for mitigating frauds, it is certainly a way to minimize the risk of such frauds occurring in an organization. Vetting ensures that no employee finds a place in the organization with a suspect background thus guarding against an organization’s reputational risk.

Current Industry Process

Many Companies have this function of background vetting report to HR, which is also under severe pressure from the business to get people on board as quickly as possible. This is likely to lead to a conflict of interest for the HR organization and may end up short-circuiting the background vetting to hasten the onboarding process. It is horrifying but true that some organizations weigh this process against costs, leading to a team of one or two persons in-house to act as mere coordinators between the employees and the third-party vendors. Reports so produced by the outsourced agency are hardly vetted. In some cases, employees get on board, and then their background vetting is initiated. There is hardly any waiting; employees are granted all company access without getting a green signal on the background investigations report. This is where it all begins… Paving the way for potential employees with fraudulent backgrounds to creep into the system and cause systemic damage to the firm’s reputation.
Keeping in view, the potential terrorist threats and increased criminal activities that encompass us in our geographical region, can we rule out someone with a dubious background, exploiting these loopholes in the system? Is this the right approach for safeguarding our firm’s reputation? This a question that we should ponder.

Trends in Background Frauds

There are ample examples to showcase employees trying to sneak into the industry with fraudulent employment and education references. There is a flourishing business in the market especially in the metros to facilitate such entry at a cost, which can fetch an offer letter, relieving letter, and a few payslips as well.
These job shops do business for a few years and shut down and find a resurgence in some other name at a later point in time …. a cat-and-mouse game between the investigator and the fraudster. There are also instances of employees manipulating bank statements, and income tax documents which are often used as authentication documents.
Even if you detect someone with a dubious background and decide not to hire him/her, he/she will walk into the next company and get hired with the same set of dubious documents. Today there is no mechanism to share information with peer groups/companies and there is no standardized background vetting process in the industry. There is a need for a collective effort to address this issue. Mutual sharing of information related to dubious backgrounds and standardization of the vetting process will collectively help in reducing the threat of employee fraud in the long run.

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