A lifestyle audit is a check that looks at the way that someone lives and compares that to their known revenue stream. These checks look at elements like home ownership, cars and vehicles, visible luxury items owned by the person in question, and more to determine whether that person is living within their means.
This is a preventative fraud detection method and is a highly successful tool used for uncovering the financial standing of an employee. Audits are useful to discover nefarious activities such as embezzlement, fraud, or even moonlighting in other jobs if they are contractually not allowed to do so.
These checks are only an indication of financial standing, however, as there are other factors to consider such as a wealthy partner or inheritance that may be contributing to visible wealth markers. An employee may have lived a luxurious life prior to getting a job with your company, however, this would also be able to be proven, making it clear that the person may have accrued wealth that has nothing to do with their revenue stream from your company. Spending habits or changes therein, also need to be considered and so lifestyle audits should be conducted regularly to produce a full picture of the employee’s financial stability.
Could a lifestyle audit on an existing employee uncover an insider threat? Yes. Absolutely.
Lifestyle audits are a comprehensive look at how an employee lives their lives. These checks look at the items that an employee has, what they have recently purchased, and how they spend their money month to month. Lifestyle audits are a very valuable resource for uncovering fraud.
For example, if you do your lifestyle audit on employee Mr. Jones, who, prior to July of this year has been spending only on necessities and essentially lives on the breadline, and your audit shows that on the first of July, he bought a Maserati in cash – be concerned. Perhaps you then do a social media risk assessment on Mr. Jones, and it shows that from July, Mr. Jones has been showing off his new Maserati and lavish parties and bottles of champagne, we can assume Mr. Jones suddenly has money. Mr. Jones has money that he did not make at your company.
Now using this information, you’ll need to go through your company’s financial records to ensure that Mr. Jones’ sudden financial windfall is not courtesy of your business. This is how many fraudsters or embezzlers are caught. Lifestyle audits and social media risk assessments allow you to see how your employee really lives and determine if their lifestyle is plausible based on their income from your company, of which you have records.
Many factors need to be considered when doing a lifestyle audit, which is why we suggest you leave it to us. Our lifestyle audits are comprehensive and all-inclusive and you will receive our expert opinion on whether you should be concerned or not. Lifestyle audits help to protect your company from financial crime and get ahead of it before it becomes a crisis.
Prevention is better than cure.
Screen and vet your employees with iFacts.