
10 ways to help prevent employee theft:
- Know your employees. Be alert to key indicators of potential theft such as sudden devotion to working late; lifestyles well above salary levels; objections to procedural changes; drugs and alcohol abuse; evidence of compulsive gambling, persistent borrowing or bad check writing.
- Supervise employees closely.Not surprisingly, studies show that when supervision is lax, theft and fraud rates go up. This doesn’t mean looking over their shoulder every minute. But it does mean checking what they do. It’s also wise to have more than one person looking out for your money.
- Use purchase orders.The payment, receipt and preparation of purchase orders should be separate functions and handled by different individuals. Use serially pre-numbered purchase orders and always verify incoming orders.
- Control cash receipts. Use serially pre-numbered sales slips and conduct weekly audits. Balancing of sales slips and register receipts should be done by someone other than the sales clerk.
- Use informal audits. Make unannounced internal audits and have a yearly audit performed by an outside firm.
- Install computer security measures.Understand your computer systems and software, and how they might be used to divert money or inventory. Restrict access to computer terminals and records. Periodically change entry codes and check regularly to ensure that security procedures are in effect.
- Track your business checks. Always use pre-numbered checks, with amounts and payees typed or written in permanent ink. Lock blank checks and a signature machine, if you have one, in a secure place.
- Manage inventory and use security systems.Separate receiving, store keeping and shipping functions. Physical inventories should be done annually.
- Beware of accounts receivable by making mail-opening and posting of customer receipts separate functions.
- Provide a way for employees to report theft or fraud by co-workers.