How to Prevent Employee Theft and Fraud

Employee theft and fraud can happen in any business. However, smaller businesses are being hit more frequently, in part because too often owners don’t have the right checks and balances in place.

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Below are modes of preventing employee theft and fraud:

1. Acknowledge that it can happen to you

Almost every case of employee theft in small business involves a person who is trusted, taking money from an unsuspecting owner. Don’t trust your bookkeeper enough that you don’t look closely at your books. Trust, but verify.

2. Avoid employees with multiple responsibilities

Avoid having the same employee set up a vendor, approve a payment, and write the check. It’s better to have more than one person involved when money leaves the business.

3. Run income and expenses through a checking account

Put all income and expenses of your business into a checking account. This way, you can track all your transactions through the receipts that cannot be tampered with because it’s controlled by the bank.

4. Review statements

Owners should regularly and randomly review transactions such as bank statements, credit card statements, and payroll reports. This will prevent your bookkeeper from using business money for personal purchases.

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I’m Jack Bonner, currently studying for my degree in finance with the goal of becoming a forensics accountant. Visit my LinkedIn page to know more about me.

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