There are many signs your company is dealing with a potentially dishonest employee. Internal audit departments and supervisors can track the performance of company employees, but competence and honesty do not always go hand in hand. Internal controls and strict documentation can help prevent fraud and theft, but dishonest employees often find vulnerabilities they can exploit. There are several ways to identify and confront employees suspected of misconduct in the workplace, and it is critical for employers to make use of these techniques in order to prevent fraud, theft, and wrongdoing.

Identifying the employee

Missing or edited journal entries, sudden changes in work habits or behavior, refusal to take vacation, and employees making unexpected, large purchases, are red flags of misconduct. Body language is another common indicator of malfeasance. An employee that is inconsistent or uncomfortable in talking about their duties and performance, has trouble talking about their prior work experience, or has difficulties maintaining eye contact when asked probing questions should be identified and monitored. People experiencing heightened emotions typically fidget, lick their lips, and look either red, flushed or pale.

Approaching the employee

Approaching an employee suspected of dishonest conduct can be a volatile situation. Interviewing by surprise is the best tactic for disarming the person. Objections such as “I don’t have enough time” or “I am not ready” should be met with responses such as “this will be quick” or “this will be informal and I am simply gathering information.”  In these interviews, individuals typically react rather than think.

During the interview, it is important to pay attention to verbal cues such as changes in speech patterns, timing of responses, fragmented or incomplete sentences, and making excuses. Deceptive subjects might experience a change in voice pitch as their vocal chords become tense, and may require additional time to answer a simple question in their attempt to contrive a false answer. Nonverbally, interviewers should pay attention to the subject’s physical signs of deception, including crossing of the arms or legs, covering their mouth with their hands, or changing their posture as if moving away from the interviewer in a “fleeing position.”

After obtaining evidence and there is a reasonable chance the subject commited wrongdoing, the interviewer should seek to obtain a written admission of guilt. This should only be conducted after all other investigative steps have been taken. As people rarely confess voluntarily, or if they believe the accuser doubts their guilt, the interviewer should present the evidence piece by piece, and ask for “comments.” An innocent person will not accept the premise of the question. The dishonest individual will often become quiet or offer weak denials. The interviewer should then seek to “establish a rationalization” for the dishonest action such as financial or family problems, or making it seem like a minor infraction in order to obtain the confession. People will rarely admit to wrongdoing if they are made to seem like a bad person.


Maintenance of a strong internal audit program and internal controls and procedures is criticial to preventing fraud and theft. Employees prone to committing wrongdoing are not only more likely to do so if they sense weaknesses in internal fraud detection, but individuals with no prior criminal history will be tempted as well. All companies should have an anonymous company hotline dedicated to handling internal tips about dishonest practices. Employee tips are the most common way internal fraud and theft is identified, followed by internal audit, management review, and lastly, accidental discovery.

During the hiring process, it is important to watch out for warning signs of dishonest employees. Lying or stretching the truth is a common problem during the hiring process, and employers should seek to corroborate applicants resume claims by both challenging them during the interview phase, and during their first few months of employment. Background checks should always be ordered on all new employees, but particularly on any employees involved with handling company finances. Internal candidates eligible for increased responsibilities and should also be considered.

Brock Treworgy