Guarding Against Employee Theft

Guarding Against Employee Theft- Complete Controller.

Many organizations and individuals face employee theft and embezzlement each year. Embezzlement is theft or misappropriation of funds by employees. According to a 2012 Association of Certified Fraud Examiners (ACFE) report, “the typical U.S. business loses 7% of its annual revenues to employee fraud”. Small businesses have the most cases and the highest losses. The risk of fraud has increased due to the advancement of technology and the progressive development of the world into a global village. Organizations should develop multi-layered fraud prevention strategies while keeping these statistics in view.CorpNet. Start A New Business Now

Warning Signs

  1. The employee is working extra hours.
  2. Petty cash and supplies are decreasing rapidly.
  3. The employee is frequently taking work home.
  4. The employee has an unusually close relationship with vendors.
  5. Employees are spending more than they are earning.

How to Prevent Theft of Physical Assets

Random and surprise audit system:

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

Segregation of duties:

The duties of the inventory management staff should be delegated 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 can enter areas with a large inventory or a lot of financial information. It should also be kept locked during off hours. Keys should be issued to specified individuals only.

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Security of blank checks:

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

Check the bank statement of business:

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

How to Prevent Expense Reimbursement Schemes

Receipts of expenses:

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

Policy for expense reimbursement:

A company must have a documented expense reimbursement policy. A 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 the expense reports submitted by different employees should be made to evaluate the legality of expenses.

How to 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:

The 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 – BenefitsHow to Prevent Theft of Cash

Manager’s approval:

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

Monthly account statements:

Regular updates of customer account statements prevent fraud at this level.

Rotation of duties:

Rotating duties and sending the employee on annual leave and vacation prevents 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 into a company bank account.

Surprise audit of cash:

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

Video cameras:

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


Fraud prevention and fraud handling are essential to secure your business. Following the above shortcuts in an organized manner will lead to an anti-fraud policy that works and strong internal controls.

Complete Controller. America’s Bookkeeping ExpertsAbout 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.LastPass – Family or Org Password Vault