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Organizations failing to report fraud

Some local businesses are too ashamed and embarrassed to admit how much their organizations are affected by occupational fraud, or to prosecute employees who are stealing from them. As a result, efforts to determine just how widespread occupational fraud is in Barbados have been hampered.

And senior lecturer in accounting at the University of the West Indies, Cave Hill Campus, Dr Robertine Chaderton, is calling for a change in attitude.

She was speaking to Barbados TODAY ahead of the start of a fraud prevention and detection seminar at the Lloyd Erskine Sandiford Centre today. The seminar was organized by the Institute of Chartered Accountant of Barbados (ICAB).

Approximately 100 of Chaderton’s students carried out research last year to gauge the extent of occupational fraud in Barbados and three other Caribbean islands over a five-year period.

“What we found was that a lot of businesses don’t want to talk about it. They are very embarrassed. So it was hard to get persons who were willing to talk,” she reported.

“What we also found out was that many companies do not prosecute because they are too embarrassed, especially financial institutions. They don’t want the publicity. A few of them would take it to court, but they say the procedure was too long and they just try to deal with it by just dismissing [the worker] or in some cases asking them to pay back.”

The survey was in an attempt to “replicate” the 2012 report done by the Association of Certified Fraud Examiners.

In addition to financial institutions, Charderton said information was analyzed from supermarkets, petrol stations and operators within the hospitality industry. She said of the information they were able to get “when we compare it with the [2012] report we are right in line”. However, she added, people were not willing to say how much they had lost.

“But what we do know is that it happens, and in a recession it happens more, because people are less able to manage,” Chaderton said.

As for the information the team managed to gather, the research found that both men and women with different levels of educational background were guilty of occupational fraud. Their time of employment varied.

“Some of them did it a few days after they were there. And when we tried to find out why persons committed the fraud it was that persons were living above their means and couldn’t make ends meet,” Chaderton said, adding that while the crime was widespread, small businesses were more susceptible because owners had less internal control. She therefore said it was critical for employers to exercise more internal control while looking out for change in employees’ behaviour.

“And we also would stress that there should be what is usually referred to as employee assistance programmes where people feel that they can turn to someone in the organization. That is one of the reasons that people do it, they feel they have nowhere to turn and they are up against a wall. So they borrow, that is how they put it, they borrow,” the university lecturer said. Chaderton also recommended a private hotline for the practice to be reported since other employees, even after witnessing the act, were also reluctant to give information.

2 Responses to Organizations failing to report fraud

  1. Tony Webster April 16, 2014 at 1:37 am

    Not reporting fraud due to embarrassment?? Check this : a school-boy scuffle required a youngster I know to report to a court on the western shores of this civilized country, back in November last. To afford some moral support, I attended, only to wait from 9.00am, till court came to order at 11.15am; then to witness endless banter and postponements, including our case, by two months, the latter because the Magistrate didn’t show up (at least, breaking the monotony). Next time, and the following occasion more postponements. I gave up. When chatting with the youngster recently, I asked him where the matter now lay. He replied that he was now up to his seventh postponement, due in June.
    I am embarrassed, and ashamed at the rediciulous farce our courts have apparently become. It’ s evidently the “new normal” from all the affable banter which I witnessed between the prosecutor, the attorneys, and from even more elevated locations.
    You think that business managers have nothing better to do with their time? The whole system is “broken”, with predictable national “trickle-down” effects.

  2. David April 17, 2014 at 8:23 am

    Mr Webster has hit all the nails firmly on the head.


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