Small businesses just don’t have the resources at hand to prevent a loss or to even know if and when it is occurring but that doesn’t mean we shouldn’t try. Take a look at this list of questions and things to consider when assessing small business vulnerability risks of employee fraud.
- Do you have written policies and procedures about how to handle bank account and cash activities and who performs what tasks?
- Do you have a policy (that every employee signs) that warns employees you will not tolerate theft of any kind? Does the policy describe what constitutes a fraud? The best deterrent to fraud is the idea that “I may get caught”.
- Does one person, collect payments, make deposits, write checks, and reconcile bank accounts?
- Do you give your employees a company credit card or a purchasing card? Are there rules and policies around use of the card and is someone checking to make sure that those purchases are business related?
- Do you understand your business systems well enough to know how they can be used to commit fraud?
- Do you review your employees’ expense reports thoroughly and question transactions that appear to be personal in nature? Do you require that they provide receipts for all expenses?
- Do you review the list of vendors that are paid from your accounts? Do you review all payments and make sure they are legitimate?
- Do you review a list of the employees on the payroll?
- Do you have employees that have sole control over their area and appear to be unwilling to interact in their territory with others?
- Do you have employees that do not take their vacation time and will only be gone for a day or two at a time?
- Do you recognize when your employees are under tremendous personal stress and are you aware that they succumb to temptation during those times of stress? Or when they feel unappreciated?
- Do you have a method for employees to anonymously report theft or do you offer rewards for informants while keeping their identity confidential?
- Do you perform thorough background checks on all employees prior to hiring?
- Do you review all checks issued, bank withdrawals, customer credits and refunds? While it is time-consuming, management review is critical to preventing and detecting fraud.
How much can your business afford to lose through employee theft? A fraud examiner can help you protect your business by evaluating your risk and implementing procedures to prevent and detect fraud. If you are interesting in getting to the bottom of your employee fraud or assess your risk management, contact Palma Financial Consulting at (281) 668-9168 in League City and get to the bottom to help save your bottom line.