Dishonest Employee Insurance and Vendor Fraud
Updated: Jul 15, 2022
Some companies carry "Dishonest Employee Insurance" which helps in mitigating losses due to theft and other fraudulent activity committed by an employee. What the policy doesn't cover is fraud originating from employees of subcontractors, vendors and others who commit these unlawful acts with the intent to either steal, misrepresent, or submit to you an altered or fictitious invoice for payment. The acts committed by others are commonly referred to by the insurance industry as "theft by an outside party" and are not covered by Dishonest Employee Insurance. In short, victims of fraud perpetrated by non-employees have little recourse and for those who have yet to secure Dishonest Employee Insurance, well you can expect to pay more following a serious incident.
The Association of Certified Fraud Examiners in their 2022 report cited a direct correlation between the presence of anti-fraud controls with lower fraud losses and quicker fraud detection. Contrast this with the number of recent cases where trusted employees had been embezzling for years and their employers' who had sustained losses dollar wise in the hundreds of thousands. In many of these cases, periodic financial examinations would've detected any irregularity much sooner. To validate this premise, 81% of victim organizations were quick to modify their anti-fraud controls following a fraud.
Jerry Ipsen is a forensic accountant who addresses these risks by examining accounting records in your office looking for suspicious activity such as possible embezzlement or theft. Most often a visit to the project site is included which immediately lets employees, subcontractors and material suppliers know that a Fraud Examiner is on the property and that fraudulent billing, and other dishonest activities will not be tolerated.
Discover how a fraud examination by Jerry Ipsen is a practical and inexpensive way of detecting, reducing, and even eliminating the opportunity for theft and embezzlement to occur. In addition, time is provided to educate your key people on the warning signs pertaining to construction fraud and what to be on the lookout for.
Thanks again to Matt List and to his wonderful staff at Desert Cornerstone Insurance for their assistance.