How To Prevent Fraud & Employee Theft In Your Business – Policies & Plans

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 committed 85% of serious 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.

  1. Practice corporate culture

Corporate culture defines procedures and policies which 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. Check out America's Best Bookkeepers

  1. 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 of all kinds of fraud should be communicated to employees. They should also be aware of actions that would be taken in case of fraud.

  1. Prevent Theft of Physical Assets

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, employee avoids stealing and fraud.

Segregation of duties

Duties of inventory management staff should be segregated to prevent fraud. Purchase order issuance and receiving of stocks should be done by two different individuals.

Security cameras

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

Limited access to inventory storage areas

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

  1. Prevent Check Tampering Check out America's Best Bookkeepers

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.

  1. Prevent Expense Reimbursement Schemes

Receipts of expenses

For reimbursing expenses, demand a receipt of the amounts that the employee is claiming.

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.

  1. 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. If you don’t practice this simple plan, then you may be paying fake companies.

List of approved prices

An approved price list should also be maintained to avoid payment at higher rates. Check out America's Best Bookkeepers

Signed receipts

Sign a check only if a signed receiving of the product is attached.

  1. Prevent Theft of Cash

Manager’s approval

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

Monthly account statements

Regular updates of customer accounts prevent fraud at this level.

Rotation of duties

Rotation of duties and sending employees on annual leaves and vacations prevent employee theft because the employee has the terror 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 bank account of the company.

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.


Check out America's Best Bookkeepers About 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-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure 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. Check out America's Best Bookkeepers