Question

An audit report found the following:

The required background checks for all new employees were not performed by Human Resources. The corporation had two new sales representatives who committed fraud on their expense reports when they were visiting golf courses across the country. Background checks later were found that they had criminal backgrounds. This loss totaled a $9,051. Additionally, ICE raided the manufacturing facility and found 2 other employees who were illegal aliens who used false social security information to be hired. This hit the local news.

Based on the above answer the following:

what happened?

what is the standard? (the proper procedure that should have been in place to avoid such thing)

why did it happen?

how much cost is lost or problem?

how does the auditor (you) recommend fixing the problem?

Answer 1

An audit report found the following relates to Not adhering /following back gorund verification at the time of joining company and subsequently company faced monetary loss :

As per The report of the National Task force on the criminal Backgrounding of America , employer has to conduct Back ground verification mainly for following points :

1. Public Safety
2. Imitation of Liability
3. Conditions of doing business
4. Avoidance of loss of business

Following piece of information that might be included in a background check like :

1. Driving records
2. Credit records
3. Criminal records
4. Court records
5. Workers compensation
6. Medical records
7. Property Ownership etc..

There are many companies that specialized in employee screening Corporation high number of employees may have connection with a third party background checking company for their employment screening.

At the time of hiring , Employer need to know that they are hiring right people and employer should minimize potential risk by adhering back ground checking ,

In the above scenario, Company not completed Back ground verification at the time of hiring , which tantamount to create a Financial Loss to the Organization as well as bad impact on Companies Goodwill / Brand value

To avoid costly penalties from Non compliance , the legal and Human Resource team should come together annually to evaluate rules, regulation in this matter

Auditor has to verify following points in case of background verification :

1. Compliance –Need to set up a Internal team ( combination of Human Resource + Legal team and review compliance issues , practice and proactively address change inn any regulation
2. Consistency –Need to ensure that policy once adopted , should follow consistent .
3. Time zone- Need to ensure that Company should reduce the overall time to hire.
4. Risk Management –Companies should balance the cost and benefit of screening analysis.

Integration with company present software system