The Fraud Examiner

Holiday Season Poses Unique Risks for Businesses

Editor’s Note: During the holidays, many people celebrate, give gifts, make charitable donations and engage in other traditional activities associated with the season. These observances often overlap into the corporate and business environment, and can instill a shared feeling of enjoyment or camaraderie among colleagues. However, they may also create a climate in which fraud can occur – along with some other negative consequences.


We consulted ACFE faculty member Eric Feldman, CFE, CIG, Managing Director for Corporate Ethics and Compliance Programs for Affiliated Monitors, Inc., on his top concerns for businesses during the holiday season.


By Eric Feldman, CFE, CIG

November 2014


There are a number of pressures that businesses and their employees face around the holidays that can increase the risk of employee misconduct. Smart businesses will anticipate these pressures and communicate with their employees early, sharing reminders of what is expected of them with regard to ethical behavior:


Giving and receiving gifts to/from managers and subordinates: ‘Tis the season for gift giving, but a company's rules on the giving of gifts aren't suspended around the holidays. Remind employees of what types, amounts and venues for the giving of gifts are appropriate, particularly between supervisors and their managers, and managers to employees. Avoid perceptions of impropriety, hurt feelings and morale problems by ensuring that everyone understands the rules.


Pressuring employees to give to charity or religious causes: The holiday season is often a time for charitable giving, but companies should have rules about pressuring employees to give. Personal, charitable solicitation in the workplace can result in overt and subtle pressure tied to bonuses, benefits or even continued employment. Charitable giving is a healthy part of the joy of the season, but if it's allowed in the workplace, it needs to be properly and transparently managed.


Celebrating and gift-giving with contractors, vendors and suppliers: Close relationships between company employees and third parties are on a slippery slope any time of the year, but the holiday season poses additional risks and challenges. Companies need to provide clear guidance to their employees on the extent to which they can/should participate in often lavish contractor parties, gift exchanges, or other celebratory events. Even an innocent passing of a bottle of holiday cheer can create expectations of payback in the contracting process, leading to the appearance (and perhaps the reality) of impropriety in the contract and procurement process.

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