Litigation + Valuation Perspectives

Demystifying Valuation, Economic Damages + Forensic Accounting

Camaraderie or collusion: encourage one, but not both

fraudManagement teams across the nation are encouraging team building among staff to encourage and promote employee friendships and to boost morale. I commend these organizations for promoting a healthy work environment which provides a social support network at both a personal and a professional level. Positive employee morale can lead to reduced employee turnover, reduced absenteeism and increased company profits.

While management is promoting a sense of camaraderie among employees, it must be careful not to promote an environment which is susceptible to fraud. As employees become comfortable with each other, they may turn to collusion to circumvent anti-fraud controls. Collusion is “secret cooperation for an illegal or dishonest purpose.” (1) Collusion typically occurs between two or more employees, an employee and a supervisor or an employee and a vendor.

The 2014 Global Fraud Study (2) published by the Association of Certified Fraud Examiners (ACFE) found that as more than one perpetrator is involved the losses associated with the fraud rises.

Number of perpetratorsMedian losses
1$80,000
2$200,000
3$355,000
4$500,000
5$550,000

See my article in the September 9, 2014 edition of BV/Lit e-News for more information about what management can do to minimize the occurrence of fraud and its impact on the organization.

Melissa E. Loughlin-Sines, CPA, CFE, CVA, CFF, ABV

(1) www.merriam-webster.com/dictionary
(2) Report to the Nations on Occupational Fraud and Abuse – 2014 Global Fraud Study, ACFE