Any organization—be it a business, non-government organization (NGO), charitable or religious institution, government agency, or the government itself—can fall victim to an inside job where the very people entrusted to look after its best interests victimize it. While fraud by insiders isn’t always well-publicized, it happens quite a bit, with alarming and increasing frequency and magnitude. You should be made well aware that there are a number of ways to identify and, hopefully, prevent these things from happening.

While many things can be done to track down, control, and prevent fraud, five easily come to mind: lifestyle checks, documentary and physical records, breach of policy and procedures, misallocation of resources, and the institutionalization of a whistleblower program.

A lifestyle check on a suspected individual is performed when there’s a mismatch between their source of income and their expenditures and assets. Typically, this is done when the salary or income of an employee, executive, or official cannot justify their and their family’s spending habits, vehicles, and home. How could a clerk have a brand-new Mercedes in the company parking lot? How could a government official afford a house in Forbes Park? An investigation into where the money came from should be conducted immediately.

Documentary records include things like Income Tax Returns (ITR), Real Property Tax (RPT), Transfer Certificate of Title (TCT), Certificate of Registration (CR) for vehicles, and Passports, which would indicate foreign travels. These and various other records should show that sources of income match the uses in the form of acquired assets and all kinds of expenses. Custodians such as cashiers, tellers, inventory clerks, warehousemen, and vault combination and key holders should be subject to regular physical inventory checks to ascertain that the cash, precious metals, valuable goods, negotiable instruments, and other assets are still in their custody and properly accounted for.

Breach of policy and procedures should not be taken lightly; this is where a lot of collusion occurs. Policies and procedures were meant to establish controls to prevent fraud and abuse. However, when people who are supposed to monitor, check, and report violations turn a blind eye, are incompetent in doing their job properly, or knowingly allow them to happen, bad things are sure to follow. To prevent these breaches, it is imperative that competent and ethical people be put in these positions and that internal auditors review that there are no violations of policies and procedures.

Misallocation of resources is used by unscrupulous, and perhaps incompetent, managers to divert manpower and resources from where they are most needed to some trivial or less important tasks. How can hundreds of billions of pesos of the taxpayer’s money just be lost to ghost projects and all kinds of corruption? Because the agencies that are supposed to monitor and catch these abuses, such as the Bureau of Internal Revenue (BIR), focus their efforts on catching the small taxpayers. The BIR probably has some of the most competent people in government, and I refuse to believe that they are all crooks. The BIR should come up with a national program to focus their efforts on the most critical leakages of non-payment of the proper taxes. How can contractors and government officials and their families brag on social media and in interviews that they have so many mansions, luxury cars, grand foreign travels, astronomical restaurant bills, and other excesses, and yet not pay the corresponding taxes? Until all these things come to pass, the BIR should only issue their Letter of Authority (LOA) to these people.

Finally, a whistleblower program should be institutionalized, primarily for the government bureaucracy and all government agencies, as well as publicly owned or listed companies. People who know something should be encouraged to disclose these anomalies without fear of reprisal or retribution; they should even be provided some kind of reward or benefit. It should be noted that the information provided by the whistleblower must be given to the right entity so that there is an assurance that a proper investigation is done and the necessary action taken to punish and prosecute these people to the full extent of the law. I think our people deserve to have hope that justice will prevail in the end.