The Role of the Human Resource Department in Fraud Prevention

The objective of this article is to provide arguments in support of the thesis that the Human Resource Department plays a key role in fraud prevention. To achieve this objective this article has the following layout. First, the article presents statistics that expose the increase of fraud in companies and the losses that they bring. Second, the article makes an analysis of the definitions of fraud and types of fraud. Third, the article presents specific cases that expose the shortcomings in the work of the Human Resource Department that create conditions for fraud. Fourth, drawing on examples and statistical information about the most common frauds in companies, the article proposes three roles of the Human Resource Department with regard to fraud prevention. These are the roles of an “architect”, “observer and analyst” and “distributor of knowledge”. The role of an “architect” involves the introduction of rules and procedures in the Human Resource Department, related to internal controls to prevent the creation of an environment that fosters fraud. The role of an “observer and analyst” is connected with establishing a system for monitoring and analyzing changes in employee behavior and the relationships between staff members. The role of a “knowledge distributor” involves carrying out training for employees and managers regarding the organization’s policy on fraud prevention. Fifth, the article offers conclusions and recommendations pertaining to the roles of the Human Resource Department in fraud prevention.