4 Ways to Protect Your Business Against Employee Fraud and Theft

 

1. Establish a code of conduct.

Did you know that Walmart employees are not allowed to accept a bottle of water or cup of coffee from a vendor at a meeting without paying for it? That’s what I mean by a code of conduct. It’s a statement that you will not tolerate unethical or illegal behavior toward anyone—customers, suppliers, employees or the company itself.

While you may not be as strict as Walmart, you should write and post a code of conduct that clearly spells out the rules for employees and the repercussions for not following them. Give the code to everyone upon hire, and periodically thereafter, and require written acknowledgement that they have read, understand and agree to comply with it.

2. Set up organizational checks and balances.

In a small business, one person may wear many hats. But the most dangerous multitasker is a solitary administrator/bookkeeper who opens the mail, handles deposits and payments and files transaction documents. No one person should control that many aspects of the business—it’s asking for trouble.

At one of my companies that processed a high volume of mail, we convened a dozen senior managers and their assistants to open the mail every day. With all those hands, the task took about 15 minutes. All checks were set aside, with a tape of their total run. When the day’s bank deposit was prepared, the total had to match the tape run earlier.

3. Institute policies and procedures.

Someone other than the bookkeeper should settle bank and credit card statements every month—and the person who reconciles the bank statements should not have the ability to enter or modify transactions in the accounting system. 

Here’s why: One of my partners started working with a new client and began routinely looking at their credit card statements. For one card, there were no records of purchases that matched the charges. An investigation uncovered that the client’s former controller had taken a company card with him when he left and had run up more than $200,000.

4. Watch employees’ behavior. 

If you notice changes in an employee’s behavior—files have been misplaced; they don’t want help with a project; they’re giving a customer excessive attention—look into it. The same goes for an employee with access to critical parts of the company’s operations or finances who never takes vacation time, or who routinely works early or late when no one else is around. 

Trust me, they’re not working those extra hours because they love their job. It might be because they don’t want anyone else to see what they’re doing. Insist that people use their vacation time and stick to regular business hours.

SOURCE:entrepreneur.com