Behavioral Red Flags of Fraud

By Michelle Muir

Contact Info

Recognizing the behaviors displayed by fraudsters can help organizations more effectively detect fraud and minimize their losses from the misappropriation of corporate assets.

Fraudsters typically display at least one of the following seven behavioral red flags while misappropriating corporate assets:

  1. Living beyond their means
  2. Personal financial difficulties or pressure
  3. Unusually close with a vendor or customer
  4. Control issues, including an unwillingness to share duties with co-workers
  5. Irritability, suspiciousness, or defensiveness in general or when questioned about work product and work duties
  6. “Wheeler-dealer” type attitude
  7. Divorce/family problems

Additional red flags at work include complaining about inadequate pay, refusal to take vacations, complaints about lack of authority and personal pressures such as addiction problems, instability in life circumstances, and excessive family or peer pressure for personal success.

If you see or suspect these behaviors in your employees, a closer look may be warranted to ensure that your company has appropriate internal controls, including segregation of duties.


The source of information for this article is the Association of Certified Fraud Examiners (ACFE) 2020 Report to the Nations on Occupational Fraud and Abuse

About the Author:

Michelle Muir is a Senior Manager with BST & Co, CPAs in the Valuation, Forensic Accounting & Litigation practice. She helps clients with their fraud and forensic accounting needs, with a particular focus on corruption, asset misappropriation, embezzlement, financial statement fraud, white-collar crime, and accountants’ liability. She also helps clients proactively manage the risk of fraud and misconduct through fraud risk assessments and review of anti-fraud controls. Michelle has over 20 years of experience investigating fraud. Her background includes forensic accounting and audit work at one of the “Big Four” accounting firms as well as in-house forensic accounting work at NYC and Capital Region law firms. Along with her Certified Public Accountant designation, she is also Certified in Financial Forensics and is a Chartered Accountant.

If you have any questions or need assistance with any fraud-related matters, contact Michelle at BST.