How to Protect Yourself from Employee Embezzlement | CPA Near Me
You want to trust the people who work for you; after all, you probably hired them and work side by side with them. But a wealth of statistics shows that worker theft is on the rise, including embezzlement. A full 95 percent of all businesses worldwide have experienced some type of employee theft, according to the latest Global Study on Occupational Fraud and Abuse.
Which industries are most affected? According to the Association of Certified Fraud Examiners, banking and financial services have the highest number of occupational fraud cases; manufacturing is second; government and public administration is third; healthcare is fourth; and retail is fifth.
As a business owner, you have many responsibilities, so it’s vital to create safeguards and internal controls to prevent worker theft. Educating yourself and putting processes in place can minimize the possibility and detect it early. Here are some tips to get you started.
Know Your Hires
It’s not enough to select a new employee based on resume, recommendation, or personality. Any hire who will handle confidential information should undergo a professional background check. It’s also smart to check references.
Look for Common Embezzlement Red Flags
Keep your antenna up for common theft indicators. The Global Study says employers should pay attention if someone is suddenly spending beyond their means, is always the first in the building and last to leave, or is overly protective of their work.
Learn All Aspects of Your Business
While it is important to delegate, you need to know what is going on with every department or area of responsibility. Over time, employees will learn which clients pay with cash, who writes checks, the average daily and weekly deposit amounts, and how much money comes from outside sources. Require each employee to keep detailed logs in your accounting software. Your small business accountant can recommend a program that includes a check and balance system with daily opening and closing reports. That way, either you or the accountant can run and analyze these reports.
Delegate Shared Responsibilities
No individual in your office should control any financial process from start to finish. Implement a controlled team approach instead. This will let you know who recorded which transactions and offer a higher degree of accountability.
Schedule an Outside Audit
Serious financial damage can add up quickly if you’re the victim of embezzlement, so it’s important to let a small business CPA audit your finances for irregularities. He or she will be able to monitor your employees’ work and catch errors, whether honest mistakes or intentional.
If you notice the numbers in your business aren’t adding up, it’s best not to tell your staff, as the suspect could destroy evidence. Instead, talk to a trusted CPA first so they can put a theft-detection process in place.
Hiring an accountant as an expert, neutral third party is a smart defense against employee embezzlement. Schedule a complimentary initial consultation with our firm in Baton Rouge, LA today. We can help you put the right systems in place.