In the contemporary world that is characterized by a high level of competition and a relatively high rate of business change, organizations are always on the lookout for how to minimize their risks especially that of fraud. Pre Employment Polygraph (PEP) screening has become an instrument which employers can utilize to determine the credibility or otherwise of prospective employees especially in organizations that require high security or have sensitive positions. However, is PEP screening the final answer to business fraud prevention? This paper discusses PEP screening in fraud prevention and detection, its benefits and drawbacks, and its place in the overall risk management framework, including adverse media scans.
Understanding PEP Screening
PEP screening includes the use of polygraphic examination in determining whether the candidates being interviewed are telling the truth or not. This type of screening is mostly used in security sensitive sectors such as law enforcement, government, and financial sectors. The polygraph records physical activity, including increased pulse, elevated blood pressure, and irregular breathing, during the time a subject answers the questions. Large discrepancies may indicate that a person is lying.
In regard to fraud prevention, the main purpose of PEP screening is to exclude applicants who may be considered as high-risk of dishonesty, malfeasance or fraud for a business.
The Significance of PEP Screening in Business Fraud Prevention
Fraud can be defined in a number of ways in a business; this can range from financial fraud and embezzlement to piracy and insider trading. Such activities may lead to severe financial losses, harm to an organization’s reputation, and legal repercussions. Hence, organisations always seek to implement preventive measures to avoid such risks and PEP screening is now becoming popular as a tool in fighting fraud.
Here’s how PEP screening can help in fraud prevention:
Identifying High-Risk Employees Early:
PEP screening helps organizations to identify the risk factors of candidates for employment especially in organizations, positions that require the candidate to deal with sensitive information, financial matters or have managerial responsibilities. When the candidates with tendency to engage in fraud are removed from the pool, the chances of hiring a fraudulent employee are minimized.
Deterring Dishonest Applicants:
Just the fact that the PEP list becomes a criterion for screening during the hiring process can help to discourage individuals with ill intentions. If job applicants are aware that the polygraph test is a requirement in the hiring process, then those individuals who have indulged in some unethical behavior or have a criminal record in the past may not apply for the job, or they may withdraw their applications on their own volition.
Strengthening Internal Controls:
When businesses use PEP screening, they set up the tone for the organization and establish credibility. It is easier for employees to stick to the ethical standards if they understand that the company is willing to screen for dishonesty from the beginning. This can have a long-term positive impact on the reduction of the propensity of fraudulent deeds within the organization.
Challenges of PEP Screening in Fraud Prevention
While PEP screening can be a powerful tool in fraud prevention, it is not without its limitations:
Accuracy and Reliability:
The polygraph tests are not perfect. While they can help to tell when someone is lying, the findings are not always correct. One can be honest but be labeled as deceptive – a false positive or one can be deceptive and then be labeled as honest – a false negative. This makes the use of PEP screening as the only method of fraud prevention unreliable.
Legal and Ethical Concerns:
There are certain areas and sectors where polygraph testing is prohibited because of legal and ethical issues. Some people have even complained that polygraph tests are invasive and may even be unconstitutional in some countries. That is why before adopting PEP screening as one of the pre-employment tests, businesses should know the legal requirements concerning polygraph testing in the country.
Not a Standalone Solution:
Consequently, while the PEP screening is helpful, it is not a comprehensive solution to fraud prevention. That is why relying only on polygraph tests to identify possible fraudsters can be very misleading for businesses. Fraud is not simple and can be in a form that is hard to be detected by polygraph tests.
Combining PEP Screening with Adverse Media Checks
However, to enhance the effectiveness of fraud prevention strategy, organizations should integrate PEP screening with other risk management tools such as the adverse media checks. Adverse media is defined as any information that is published and is negative or unfavorable to a person or organization through news, online or social media. Adverse media check during recruitment enables the business organization to screen the candidates for criminal records, fraud claims, and other unethical behaviors even if the candidates have not been legally charged.
PEP screening and adverse media check can be an effective combination since the latter provides additional information about a candidate. For instance, if an applicant has passed the polygraph test but has been associated with fraud cases in the media, the business may continue testing him/her or reject him/her.
Fraud Prevention in Business: The Future
Thus, PEP screening is one of the methods that can be employed in the fight against business fraud and reduce risk as much as possible. However, to get the best out of it, it should be used in conjunction with other fraud prevention measures such as background checks, adverse media search, financial audits, and internal controls.
Fraud prevention is a complex issue and can never be fully solved by a single solution, PEP screening can help to prevent fraud and raise awareness of certain warning signs but it is not the complete solution. However, when used together with other tools such as adverse media checks, it provides a stronger line of defense against fraud.
Conclusion
The use of PEP screening is highly effective in identifying potential fraud risks during the hiring process; however, it should not be viewed as a complete solution to preventing business fraud. It is even more effective when used in conjunction with other risk management activities such as media search to give a full picture of a candidate and risks associated with him/her. Due to the increased complexity of the business environment, there is a need to adopt a multiple layer strategy to prevent fraud and maintain business integrity.
