Fraud Prevention: Business Safeguards

Employee theft prevention - Complete Controller

Business owners often face fraud and theft each year due to their employees. The risk of fraud has increased due to the advancement of technology and the progressive development of the world market. According to research reports, organizations face a 5% loss due to fraud each year, in which internal employees commit 85% of severe fraud cases. Organizations should develop multi-layered fraud prevention strategies while keeping these statistics in view. Practice the following plans and policies to prevent fraud and employee theft in your business.

Practice Corporate Culture

Corporate culture defines procedures and policies that govern employees. The organizational structure of reporting systems, the accountable person, their segregation of duties, job responsibilities, and limitations should be clearly defined. Hire the right employees by investigating their past employment history and educational background.

Establish an anti-fraud policy

A documented policy that defines fraud, its prevention, and detection policies should be implemented after proper training of all employees. A zero-tolerance policy for all kinds of fraud should be communicated to employees. They should also be aware of actions to be taken in case of fraud.

Prevent Theft of Physical AssetsLastPass – Family or Org Password Vault

Random and Surprise Audit System

Along with an annual and quarterly audit of assets, a system for uninformed audits should also be developed. Under the pressure of unexpected audits, employees avoid stealing and fraud.

Segregation of Duties

The duties of inventory management staff should be segregated to prevent fraud. Two different individuals should do purchase order issuance and receiving of stocks.

Security Cameras

CCTV cameras should be installed in inventory storage areas to prevent employee theft.

Limited Access to Inventory Storage Areas

Only authorized personnel should be allowed to enter areas where inventory is kept, which should be kept locked in off-hours. Keys should be issued to specified individuals only.

Prevent Check Tampering

Security of Blank Checks

Blank checks should not be accessible to anyone and should be locked until required for bookkeeping.

Check Bank Statements of the Business

A review of monthly bank statements helps in detecting fraud in the form of tampered checks.

Prevent Expense Reimbursement Schemes

Receipts of Expenses

For reimbursing expenses, demand a receipt of the amounts the employee claims.

Policy for Expense Reimbursement

A company must have a documented expense reimbursement policy. Clear segregation of reimbursable expenses should be defined in that policy, and every employee must receive a copy of the reimbursement policy.

Comparison of Expense Reports

A comparison of expense reports submitted by different employees should be made to evaluate the legality of expenses.Download A Free Financial Toolkit

Prevent a Billing Scheme

List of Approved Vendors

To prevent fraud at this level, maintain a list of approved vendors and do research to ensure the legality of the vendors. You may be paying fake companies if you don’t practice this simple plan.

List of Approved Prices

An approved price list should also be maintained to avoid payment at higher rates.

Signed Receipts

Sign a check only if a signed receipt of the product is attached.ADP. Payroll – HR – Benefits

Prevent Theft of Cash

Manager’s Approval

Sensitive transactions should always be accomplished only after the approval of a manager.

Monthly Account Statements

Regular updates of customer accounts prevent fraud at this level.

Rotation of Duties

Rotating duties and sending employees on annual leaves and vacations prevent employee theft because the employee is terrified of easy detection by others.

Bank Lockers

Cash and payment handling by employees should be minimized to prevent cash theft. Payments should be received directly in a company bank account.

Surprise Audit of Cash

Discrepancies in cash can be detected easily by counting the cash and comparing it with receipts.

Video Cameras

Install video cameras in sensitive areas where cash is handled to prevent stealing.


Fraud prevention is critical to secure your business. Following the above plans and policies in an organized manner will prevent employee theft.

Cubicle to Cloud virtual businessAbout Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.CorpNet. Start A New Business Now