Workplace fraud cost $3.2B last year
'Staff morale and management confidence ... really take a hit': CGA VP of research
Fraud in the workplace cost Canadian small businesses $3.2 billion last year, an accountancy group says.
The report published Tuesday by the Certified General Accountants Association of Canada (CGA) found some 290,000 small and medium-sized enterprises were victimized by some sort of occupational fraud last year.
The survey of firms with less than 500 employees found that one in four, or 26 per cent, of companies had been cheated by an employee. The most common examples would be misappropriation of either company assets and inventory, or straight cash.
"The financial loss is one thing, but it’s staff morale and management confidence that really take a hit," CGA vice-president of research Rock Lefebvre said. "The reputation, value, and public and client trust of these companies also suffer."
Among those victimized, 20 per cent of companies said they experienced instances of employee fraud at least four times during the year.
Eye-popping figures like that came alongside others that suggested small businesses aren't taking the issue seriously enough. Eighty per cent aren't prepared to deal with fraud in the workplace, the CGA says, and almost 60 per cent don't go through regular assessments of how at risk they are to fraud.
'Companies need to be vigilant'
Even basic common sense such as periodic inventory monitoring isn't happening, the CGA warned.
"It’s a genuine threat and companies need to be vigilant. It may be a case of pay now, for prevention, detection and response measures, or quite possibly pay later," Lefebvre said.
Statistics Canada data suggests there were 87,695 instances of fraud officially recognized by police agencies. But the CGA report suggests workplace fraud is going largely unreported.
"The risk of workplace fraud is almost certain to rise as economic growth slows and more employees experience financial difficulties," Lefebvre said.
More than 80 per cent of the fraud instances in the CGA's report were for under $1,000.
But the report intentionally avoided instances of more sophisticated "white-collar crime," so the true toll of fraud could be much larger.