Internal Theft Basics

(Lesson)

by Jim Goding

with acknowledgement to

Association of Certified Fraud Examiners

We start this section with a definition:

• Occupational fraud: the use of one’s occupation for personal enrichment through deliberate misuse or misapplication of the employing organization’s resources or assets.
• We are using the term “internal theft” to cover all forms of occupational fraud. This is simply an easily understood term. The term is meant within these materials to cover all forms of theft from the employer by the people who work for it.

Basics:

• In most cultures in the world today, it requires an extreme amount of stress, or a completely unethical person, to perpetrate fraud or theft upon the employer—the person or group or corporate entity upon whom one’s living depends.
• Note: Much of the following material is summarized from material and reports published by the Association of Certified Fraud Examiners. Further reading is encouraged. The full text and presentation materials, as well as complete statistical information,  can be found at this website: http://www.acfe.com/

Internal Theft Triangle: In order for internal theft and fraud to occur, the situation requires three things: Perceived Need, Justification and Opportunity.

We call this the Internal Theft Triangle. It is an important concept for anyone working in the fields of loss prevention, risk management, or Casino Surveillance and Security. We will take up these concepts individually and then show how we use them in Surveillance.

Approximately 10  pages of material have been deleted here.

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Internal Theft: Prevention

• Prevention of Internal Theft begins with the hiring process: is this person working for the casino or for himself? As the casino business and all associated businesses including bars, restaurants and retail are cash-flow intensive, we need to ensure that our employees are honest. More information is included at the end of this section. However, this is not critical information for Surveillance personnel, as they are not a part of the hiring process, and may only become involved with it when a person has already gotten involved in illicit activity as an employee. It is included only because you may end up having to compare hiring records at some future time to see if some departmental executive or Human Resources manager was ignoring standard hiring practices for reasons of his own.
• The next level in safeguarding the assets of the casino operation is correct internal controls and procedures. (ref: Effective Procedures) These are outlined in law and set out very specifically in the approved Minimum Internal Control Standards submissions to Gaming Regulation (in whatever jurisdiction) to which the casino must remain in compliance.
• We are required to have certain controls in place. These controls, as outlined in MICS, are the beginning. In essence, all of these controls say only one thing: keep control and responsibility spread out, so that no single person has the ability to ability to hit the assets of the casino operation.
• The exact control procedures are important only in that once accepted, they are followed without exception.

It is possible to create, for individual operations, equivalent controls. The important thing is that no one person be given the authority and access to divert assets without being detected or questioned.

Approximately two pages of material have been deleted here.

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Copyright © 2010 by Jim Goding. All Rights Reserved.