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Mandatory Vacations

Mandatory vacation policies serve as both an employee wellness measure and an internal fraud detection control by temporarily removing individuals from processes they may be manipulating. When employees cannot intervene in reporting or approval workflows during their absence, hidden misconduct is more likely to surface.

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About this video

Mandatory vacation is a personnel and administrative control that organizations implement to mitigate the risk of insider threats and financial fraud. While its surface-level benefit is employee wellness and recovery, its security value lies in the temporary removal of individuals from critical processes they control or influence. When an employee cannot insert themselves into a workflow during their time away, manipulated data, falsified records, or fraudulent transactions are more likely to appear in their unaltered form, creating an opportunity for detection. A practical illustration involves a procurement and check-writing process where a single employee manages both transaction execution and reporting. If that individual has been embezzling funds and routinely altering reports to disguise the recipients of payments, their ongoing presence in the process is what allows the fraud to continue undetected. During a mandatory vacation, however, reports may be pulled without modification, exposing payment records that show funds directed to unauthorized or suspicious payees. A reviewer encountering those records can then flag the anomaly and initiate an investigation. This control is most effective when combined with separation of duties and regular auditing, since mandatory vacation alone does not prevent fraud but creates a window in which concealed misconduct becomes visible. Organizations that enforce this policy consistently reduce their reliance on any single employee's integrity to maintain accurate records, and they establish a routine cadence during which internal controls have a better chance of functioning as intended.

What you'll learn

What's covered

Mandatory Vacations

Aligned to

NIST 800-53
PS-5 Personnel Transfer
PM-12 Insider Threat Program
ISC2 CISSP
1.8 Contribute to and enforce personnel security policies and procedures
CompTIA Security+
5.1 Summarize elements of effective security governance.

Key terms

Mandatory Vacation
A policy requiring employees to take scheduled time away from their duties, allowing organizations to detect fraudulent or unauthorized activity in their absence.
Internal Control
A policy or procedure implemented by an organization to safeguard assets, ensure accurate reporting, and prevent or detect fraud.
Fraud
Intentional deception or misrepresentation carried out for financial gain, such as embezzlement or falsifying records.
Insider Threat
A security risk that originates from individuals who have authorized access to an organization's systems — such as employees, contractors, or partners — and misuse that access either maliciously or through negligence.
Least Privilege
A security principle that grants users and systems only the minimum access rights needed to perform their functions.
Separation of Duties
SoD
Separation of Duties is a security control principle requiring that critical or sensitive tasks be divided among multiple individuals to prevent fraud, collusion, and unauthorized actions by any single person.

Topics

Insider Threat Fraud Detection Access Control Security Governance Identity And Access Management Risk Management

Transcript

Another thing that a company could implement is mandatory vacations. Not only can an employee come back feeling refreshed after a vacation, but it also can flag if there are certain risks that are happening within the company.

A Scenario

Let's take a little scenario. Let's say our company has a process for purchasing certain pieces of equipment. We're going to choose a vendor and product, we're going to go and cut a purchase order, maybe we go through some approvals with this, and we write a check. And then occasionally we have to pull reports on this process — we've got to pull the reports together and present it.

Well, let's say that one of the employees that's in charge of this process, and specifically the writing the checks part of this, maybe they're embezzling money. And every time they pull a report on this, they go and alter the report. Maybe they change who this was written out to, so it doesn't look like it was written out to them, but written out to somebody else, written out to another vendor that you have. And so they are constantly inserting themselves in this process to make sure that they're covering their tracks.

How Mandatory Vacation Corrects It

If they aren't there to alter this report when it needs to be pulled, or when it gets pulled, then maybe the report comes with the correct information on it and can be caught. Somebody's taken a look at that and says, why did we write a check to this person, this seems really odd, and starts doing research into this and discovers that there's this embezzlement that's been happening. And so mandatory vacation can expose some fraud within the company.

And of course the other advantage to this is that by making people take their vacation time, they come back feeling refreshed and hopefully perform at a higher level, contributing more to the company because they took this vacation time.

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