Protecting Your Business: Safeguards and Controls to Prevent Employee Theft | Baton Rouge CPA

Being a business owner comes with numerous responsibilities and challenges. Balancing client demands, overseeing staff, and managing financial transactions can be overwhelming. That’s why it’s crucial to establish safeguards and internal controls to mitigate the risk of employee theft. While it may be difficult to fathom that someone you hired could be stealing from you, naivety in this matter has cost business owners significant revenue. However, by educating yourself and implementing effective processes, you can minimize the possibility of falling victim to employee theft. Here are essential tips to help you get started:

1. Thoroughly Know Your Hires Don’t solely rely on resumes and personalities when hiring new employees. Since they may have access to sensitive information, it’s essential to conduct professional background checks and request references from their previous employers.
2. Stay Informed As time passes, employees become aware of various financial aspects, such as cash-paying clients, check writers, deposit amounts, and external revenue sources. It’s crucial that you also possess this knowledge. Implement a practice where employees log these details in your accounting software, and collaborate with your accountant to create a comprehensive program that includes check and balance systems with daily opening and closing reports. Ensure that only you or your accountant have access to run and analyze these reports.
3. Promote Shared Responsibilities Avoid granting a single individual complete control over financial processes. Establish a team-based approach to tasks related to finances. By doing so, you can track who records which transactions and foster a greater sense of accountability among your staff.
4. Recognize Red Flags Keep a vigilant eye for common indicators of employee theft. Be cautious if an employee suddenly starts spending beyond their means, consistently arrives early and leaves late, or exhibits excessive protectiveness or secrecy regarding their work.
5. Schedule External Audits To prevent serious financial damage resulting from embezzlement, periodically hire an external accountant to review your finances and identify irregularities. They can monitor your employees’ work and detect errors, mistakes, and potential theft.

If you observe discrepancies in your business’s financials, it’s crucial not to disclose this information to your staff, as the suspect could tamper with evidence. Instead, consult a trusted CPA who can establish a foolproof process to catch the culprit and recover your funds. Our Baton Rouge, Louisiana team is here to support you with expert guidance and solutions. For any inquiries or to schedule an appointment, reach out to us today. Let’s ensure your business thrives with a solid foundation and protected finances.