Not all crooks roam the streets at night. Some might be roaming company hallways, stealing cash, forging or altering checks, and pilfering inventory and property.
Even worse, they may be stealing intellectual property such as confidential documents or trade secrets. What can you do to pull the plug on employee theft and fraud? Here are 18 crime busters:
- Talk openly with your employees about theft and dishonesty. Set an example for ethical behavior.
- Be suspicious of any employee with a sudden financial change. (Has someone started buying expensive clothes, gifts, or cars?)
- Prosecute offenders. It helps deter further crime. Articulate a zero tolerance policy in your employee handbook.
- Have the bank send all canceled checks and bank correspondence to a different address (for example, a post office box or your home).
- Require employees to sign out and sign in equipment. When a staff member leaves the company, make sure laptop computers, cell phones and other equipment are promptly returned.
- Periodically change locks on doors and file cabinets. And change computer passwords regularly, particularly after someone leaves the company on bad terms.
- Keep a close eye on petty cash. Be skeptical about excessive voids, credits or damage claims. Investigate all missing documents. Don’t let employees think no one notices when something is missing.
- Visit frequently – and unannounced – your warehouse or storage areas. Look for suspicious patterns. For example, do certain employees always park near the door?
- Randomly check deliveries to your business and your customers. There may be hidden stolen goods in them.
- Never accept photocopies of documents like invoices and delivery tickets.
- Look into unexplained employee absences. At the same time, be suspicious if a staff member never takes a day off. That could mean an employee is afraid that theft will be detected if he or she isn’t around to cover it up.
- Spot-check phone bills for calls to unrecognized business numbers.
- Conduct unscheduled audits. Pull purchase records from the company files and ask the person in charge if they compared prices. If not, why?
- Require full documentation. Ask for receipts, delivery times and notes on the condition of goods when they arrived.
- Pay only for what you receive. Remind staff members that the company doesn’t pay for items not ordered, even if an invoice is submitted.
- Get professional help. Ask your insurance agent to visit your business and check it out before buying a substantial theft insurance policy. Your CPA firm can perform an internal control study and make recommendations to segregate employee duties in a way that minimizes illegal activities and reduces theft.
- Hire a bonding company to bond your employees, if possible.
- Establish an anonymous tip program that allows employees to report questionable behavior.
These are only some of the steps your company can take to help prevent internal fraud.
Caution: If you discover suspicious activity and don’t have concrete proof, get legal advice before confronting an employee. A false accusation could irreparably harm employee morale and could result in a lawsuit against your company.
Need to discuss a specific situation with a Certified Fraud Examiner? Leave us your contact information below and we will get back to you promptly.