Prevent Employee Fraud and Theft with These 8 Tips

Have you ever been the victim of employee fraud or theft? If so, you are not alone. A significant percentage of business revenue is lost yearly to employee theft. This loss is more significant in smaller organizations and should be addressed as soon as possible to mitigate losses. A working environment that discourages fraud and theft is key, and can easily be achieved by following the 8 tips below:

Promote a Positive Work Environment

When you create a positive work environment, it helps to encourage your employees to act in the best interest of your business and to follow established procedures and policies. This can be achieved by having clear organizational structure, written job descriptions, open lines of communication between employees and management, positive employee recognition, comprehensive procedures and policies, and fair employment practices.

Apply Internal Controls

Internal controls are indicators that measure and ensure the efficiency and effectiveness of compliance with laws and regulations, operations, accurate financial reporting, and safeguarding of assets. To truly be effective, the procedures and policies should address authorization controls, access controls, and separation of duties.

Employ Honest People

This is of course something that is easier said than done but you need to try because dishonest employees will find ways to go around your carefully laid out internal controls and sabotage your efforts to maintain a positive work environment. It is nearly impossible to know which potential employees will be dishonest but a quick look at each potential hire’s background can help you weed out the bad apples.

Go for a pre-employment background check and be sure that it will check for the following:

  • Employment verification of reasons for leaving the previous job, what position was held, and length of employment.
  • Education verification for degrees and/or certifications from accredited institutions
  • Driver’s license for serious or numerous violations.
  • Civil history for lawsuits involving fraud, restraining orders, and collections.
  • Criminal history for crimes involving fraud, violence, and theft.

Educate and Train Your Employees

Informing your employees about your internal controls to deter and detect fraud, the procedures and policies that are in place for fraud, your organizations ethics policies and code of conduct, plus how someone will be disciplined if caught violating any of these is a good extra measure for fraud prevention.

Employees should be given annual training on the topics above as well as informed of what is considered as fraudulent behaviour and should be asked to sign an acknowledgement after each training session. This can be very useful in court and in preventing any legal action in the first place.

Have an Anonymous Reporting System

A whistleblower program is a recommended reporting system that vendors, customers, and employees can use to report violations of procedures and policies anonymously.

Whenever possible, encourage and promote the use of the reporting system and be sure to take reports seriously. Every report should be investigated thoroughly to ensure this tip’s success.

Frequently Perform Audits (Both Regular and Irregular Audits)

Unannounced random audits are more effective than regular scheduled ones for identifying new fraud vulnerabilities and figuring out if existing controls are working as they should. This also makes possible wrongdoers uneasy about committing any fraud.

Investigate All Incidents

No matter how small or how big a report is, make sure that a prompt and thorough investigation is performed to ascertain if fraud really did occur or if there was any policy or procedure violation. Doing so will mitigate your losses in case of a real threat.

Set A Good Example

Business owners and senior management must lead by example and must be held to the same accountability as employees are regardless of position. This allows employees to see that procedures and policies are indeed followed to the last letter and they’d be less tempted to commit fraud.

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Prevent Employee Fraud and Theft with These 8 Tips
Article Name
Prevent Employee Fraud and Theft with These 8 Tips
Description
Have you ever been the victim of employee fraud or theft? If so, you are not alone. A significant percentage of business revenue is lost yearly to employee theft. This loss is more significant in smaller organizations and should be addressed as soon as possible to mitigate losses. A working environment that discourages fraud and theft is key, and can easily be achieved by following the 8 tips below:
Author
Haywood Hunt & Associates Inc - Toronto & Mississauga Private Investigators