Employee theft is noted by Mishra and Prassad (2006) to be a major component of private and public retail shrinkage.There is a consensus that theft in the workplace constitutes a serious offense and is a cause of serious problem (Weber, Kurke & Pentico, 2003).Employees have been noted to steal time, money, merchandise as well as other forms of company property like information in exchange for cash and other forms of favors. Wells (2001) noted that opportunity is the main reason for commissioning fraud. According to the U.S. Chamber of Commerce, U.S. employees lose between $20-$40 billion annually through employee theft alone. This theft is noted to be responsible for 30% of all business failure (Condon,2003).Bamfield (2004) further indicated that employee theft is commonplace in the business today. General prevention strategies against employee theft: A literature review

Vigilance is noted as the key to the prevention of corporate fraud and the prevention initiatives must involve all employees. If ignored then, it can have serious consequences on the affected company (Bokaba,2005). Glover (1995) for instance noted that electrical surveillance can help in the reduction of employee theft by between 35 to 75%. The breakdown in the levels and forms of management controls are noted by Hemphill and Hemphill (1975) to be the main reasons as to why employees can gain unscrupulous access to company money as well as property.

According to Anderson (2007) employees engage themselves in corporate fraud as a result of three main factors. These are;

The presence of a situational pressure such as a financial need

The presence of a perceived opportunity to participate in or conceal a crime as well as

A method of rationalizing a dishonest act as noted by Albrecht and Wernz (1993).

How company can handle the suspected fraud case

Before embarking on the fraud detection methods, it is critical that we conduct a review of what constitutes fraud, why people engage in fraud, why it happens as well as how fraud manifests itself in any given company. Association of Certified Fraud Examiners (ACFE), defines fraud as the deception as well as misrepresentation that a person or an entity makes with the knowledge...

IN this particular case the employee were alerted by the erratic behavior as well as the lavish lifestyle of the plant controller while also stating that the controller had been overriding the existing controls and thereby preventing any audit process from being able to effectively detect the ongoing embezzlement. The plant controller is noted to be well-respected and enjoyed a lot of trust from the CEO and the CFO. Their families are also noted to be involved in the same civic as well as religious organizations. The fact that launching of an investigation on the plant controller's perceived fraudulent operations could cause considerable disruption in the corporation's operations and the personal lives of the employees makes such a move extremely dangerous to the very existence of the company.
The analysis of the possible fraud scenario

The lavish lifestyle

Lavish lifestyle is noted by Albrecht et al. (2011) not to be a sure sign that fraud is indeed taking place in a given company. A person's income must reflect their source of income. There is however a general need for the truth to be established on the actual source of income before branding any of the cases a fraud. This is because one might owe their sudden change in income to privately sourced funds such as inheritance and lottery wins.

The tempering with the set internal controls

One of the reasons for the alleged fraud commissioning in the company is the tampering with the internal auditing controls by the suspected employee. Some of the common internal controls involve check and payroll tampering.

The need for investigation

All suspected cases of fraud should be investigated. The fraud detection process should be carried out according to the fraud detection maturity model as indicated below. This should involve the use of both structured and unstructured data.

Figure 1: Fraud detection maturity model (Ernst & Young,2009).

There is a possibility that the employee was indeed tampering with the set internal…