Fidelity Investments is in the news for letting go more than 200 workers who allegedly claimed employee-purchase program reimbursements they were not entitled to, according to reports. Here's a selection of online articles that look at what happened at Fidelity and that examine ways employees can abuse discount and procurement programs.
Employees Ripped Off the Equipment-Purchase Program
Fidelity Investments fired or allowed more than 200 employees to resign over alleged misuse of a workplace-benefit program. The company had reimbursed staff for as much as 20 percent of the cost of computers and related equipment, and also helped employees buy physical-fitness-related products such as FitBits. A companywide audit found some employees bought equipment, immediately canceled their orders, then collected the company's reimbursement, according to reports. Some employees received reimbursements for as much as $2,000 for equipment they didn't keep, and some submitted altered receipts to claim reimbursements.
(Wall Street Journal, Boston Globe and Reuters)
Discount Abuse: Violations or Theft?
A different yet parallel fraud is abuse of employee-discount programs in a retail setting, where employers let workers buy store merchandise at a considerable discount under certain conditions. Abuse occurs when, for instance, employees resell discounted items online for a profit. Retailers can press for prosecution, but many find it difficult enough to get the attention of an overburdened criminal justice system for actual cash and merchandise theft, let alone for "discount abuse." Under labor and employment laws, however, knowing and willful misconduct, especially misconduct that results in a company loss, is grounds in most states for termination. This often makes it more efficient for employers to treat discount abuse as a policy violation rather than a crime.
Detecting Procurement Card Abuse
A similar type of fraud is abuse of procurement cards. Certain employees are given prepaid cards to buy a high volume of items through small transactions that otherwise would overwhelm the accounts payable process. Common red flags of employees using these cards to make personal purchases are:
- The employee presents several reconciliations at a time, or says that the reconciliations need to be signed quickly due to a deadline. This technique reduces the amount of time for review, thus allowing the employee to hide unauthorized transactions.
- The employee submits receipts with a long list of purchase items. It can be difficult to detect personal items in these lengthy lists.
- Purchases are made after business hours from restaurants, gas stations or other merchants. The employee may try to explain that it was a mistake and that he or she used the wrong card.
(Association of Certified Fraud Examiners)
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