Executive Roadmap to Fraud Prevention and Internal Control: Creating a Culture of Compliance, 2nd Edition

CHAPTER 13

Time to Do Background Checks

EXECUTIVE SUMMARY

It has often been said that the best indicator of future performance is past performance. Vetting all employees through background investigations is an absolute necessity today. During a difficult economic climate, fraud in the workplace has increased. The FBI has stated that employee theft is the fastest growing crime in the United States.1 The level of scrutiny in a background check should be commensurate with the employee's role and responsibilities. Background investigations cost money, but this is money well spent. Companies have been embarrassed and worse when the star CEO was found to have skeletons in the closet that easily could have been discovered through a simple public records search. Well-regarded CEOs also have had their reputations damaged when they joined start-ups without doing appropriate due diligence. Due diligence and background checks also are important in the world of mergers and acquisitions. Even the best background checks conducted at the time of hire will not help if there are no periodic updates to develop any subsequent arrests, civil actions, or adverse media reports regarding employees.

If you have decided to adopt the recommendation of the Committee of Sponsoring Organizations (COSO), as well as other compliance initiatives, to start screening job applicants, you have taken a great first step. Now what? One of the easiest ways to establish a strong moral tone for an organization is to ...