The Arizona Republic has a great article titled Facing the issue of employee theft. The paper zeros in on the need for small businesses to be aware that it’s not just the Wal-Marts of the world who suffer from fraud losses. Here’s a quote:
The 2006 report by the Association of Certified Fraud Examiners showed that businesses with fewer than 100 employees suffered a median of $190,000 in fraud losses. Without safeguards, any business is susceptible to fraud, especially common forms like check tampering, fraudulent billing and stealing money before it’s recorded.
Look at that figure. For Wal-Mart, $190,000 is a rounding error. For a small business, it could be a killing blow. In addition to careful, due-diligence hiring including a background check, here are some things you can do to prevent insider fraud and limit its potential impact.
- Sign your own checks
- Have an way that employees can report fraud anonymously
- Get to know your company financial records (you should do this anyway)
- Conduct surprise audits
Here’s the most important thing: implement a system of checks and balances. In most small business fraud cases, one employee was allowed to work essentially unchecked.