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. Limitations should clearly define the organizational structure of reporting systems, the accountable person, their segregation of duties, job responsibilities, and regulations. Hire the right employees by investigating their past employment history and educational background.
Establish an Anti-Fraud Policy
A documented policy defines fraud, its prevention, and detection procedures that procedures will be implemented after proper training of all employees. Policies should communicate a zero-tolerance policy for all kinds of deception to employees. They should also be aware of actions that employees would take in case of fraud.
Prevent Theft of Physical Assets
Random and surprise audit system
Along with an annual and quarterly audit of assets, a system should also develop a strategy for uninformed audits. Under the pressure of random audits, employee avoids stealing and fraud.
Segregation of duties
The manager should segregate the duties of inventory management staff to prevent fraud. Purchase order issuance and receiving of stocks should be done by two different individuals.
Security cameras
The store should install CCTV cameras in inventory storage areas to prevent employee theft.
Limited Access to Inventory Storage Areas
Only authorized personnel should be allowed to enter inventory locations, and these areas need to be locked during 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 detect fraud in the form of tampered checks.
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
Different employees should compare expense reports submitted by additional employees to evaluate the legality of expenses.
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 do not practice this simple plan, you may be paying fake companies.
List of approved prices
Vendors should also maintain an approved price list to avoid payment at higher rates.
Signed receipts
Sign a check only if a signed receipt of the product is attached.
Prevent Theft of Cash
Manager’s approval
The manager \ should always accomplish sensitive transactions after a manager’s approval 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. The company’s bank account should receive payments directly in the company’s bank account.
Surprise audit of cash
Comparing receipts can detect discrepancies in cash easily by counting the money and comparing it with tickets.
Video cameras
Install video cameras in sensitive areas where cash is handled to prevent stealing.
Conclusion
Fraud prevention is critical to securing your business. Following the above plans and policies in an organized manner will prevent employee theft.
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 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.
