3 Tips To Prevent Internal Theft
Are you concerned about internal theft in your company? It's a valid concern. If you have employees who regularly handle company funds or receive client payments, those employees may have ample opportunity to divert money into their own accounts. And once a theft has happened, you may have difficulty recovering the funds, even if the employee is caught and convicted. The best way to reduce theft losses is to prevent theft from happening altogether. Here are a few tips on how you can prevent internal theft in your company:
Separate functions. If one or two people handle the entire receivables or payable processes, then you could be vulnerable to theft. That's because that one person may be able to cut checks to themselves or deposit checks in their own account without anyone else noticing. The best way to mitigate this risk is to split up duties among a group of people. For instance, the person who opens mail with incoming checks shouldn't also be the person who deposits the checks into the company bank account. The person who prepares purchase orders shouldn't be the same person who makes the payments.
By separating these roles, you can reduce the odds of someone, for example, creating a fake purchase order and paying it. Assign specific tasks to specific people and then make sure everyone knows the entire payable and receivable chain. That way you can quickly identify where in the chain theft may have occurred.
Get to know your employees. Another good indicator of theft is a change in employee behavior. Get to know your money-handling employees so you can identify if their habits change. For example, have you noticed an employee dealing with financial troubles at home? Does a certain employee who handles company money insist on working late most nights even though they've rarely done so in the past? Are they living a lifestyle that appears to be well above their salary level?
Any of these issues could signal internal theft. If you notice anything out of the ordinary, take a closer look at that person's role to see if any misconduct has occurred.
Have random regular audits. Perhaps the greatest deterrent of internal theft is the prospect of the employee getting caught in the near future. Having regular internal audits and financial forensic investigations can be a great way to let employees know that they likely won't be able to get away with accounting fraud or other theft. An accounting and financial forensic service can review your books and transactions to identify where theft may have occurred. And they can usually identify who was most likely to have committed the fraud.
Schedule these at random dates. If your employees know when the audit will happen, they may be able to clean up their tracks before the investigative team comes in.
For more information, contact a service that conducts audits and financial forensic information like Epps Forensic Consulting PLLC. They can help you put in best practices to prevent future theft.