Prevent and Detect Employee Theft

By March 2, 2017Articles

Being Aware of Employee Theft

The following article topic is not one that people like to talk about, however, we have seen a few clients come across this issue and thought it was timely to discuss this topic.

If you have concerns or suspicions, we encourage you to contact us for any assistance with a discrete forensic investigation. (Contact us now).

Not all crooks roam the streets at night. Some may be roaming your company hallways, stealing cash, forging or altering checks, and pilfering your inventory and property. Even worse, they may be stealing such intellectual property as confidential documents or trade secrets.

Tips on Preventing and Detecting Employee Theft

How can you pull the plug on employee theft? Here are 18 crime busters:

  1. Talk openly with your employees about theft and dishonesty. Set an example for ethical behaviour.
  2. Be suspicious of any employee with a sudden financial change (for example, someone who starts buying expensive clothes, gifts, or cars).
  3. Prosecute offenders. It helps deter further crime. Articulate a zero tolerance policy in your employee handbook.
  4. Have the bank send all cancelled cheques and bank correspondence to a different address (for example, a post office box or your home).
  5. Require employees to sign out equipment.When a staff member leaves the company, make sure laptop computers, mobile phones and other equipment are promptly returned.
  6. Periodically change locks on doors and file cabinets. And change computer passwords regularly, particularly after someone leaves the company on bad terms.
  7. Keep a close eye on petty cash.Be skeptical about excessive voids, credits or damage claims. Investigate all missing documents. Don’t let employees think no one notices when something is missing.
  8. Make frequent unannounced visits to your warehouse or storage areas. Look for suspicious patterns. For example, do certain employees always park near the door?
  9. Randomly check deliveries to your business and your customers. There may be hidden stolen goods in them.
  10. Never accept photocopies of documents like invoices and delivery tickets.
  11. Look into unexplained employee absences.At the same time, be suspicious if a staff member never takes a day off. That could mean an employee is afraid that theft will be detected if he or she isn’t around to cover it up.
  12. Spot-check phone bills for calls to unrecognized business numbers.
  13. Conduct unscheduled audits. Pull purchase records from the company files and ask the person in charge if they compared prices. If not, why?
  14. Require full documentation. Ask for receipts, delivery times and notes on the condition of goods when they arrived.
  15. Pay only for what you receive. Remind staff members that the company doesn’t pay for items not ordered, even if an invoice is submitted.
  16. Get professional help. Ask your insurance agent to visit your business and check it out before buying a substantial theft insurance policy. Your accounting firm can perform an internal control study and make recommendations to segregate employee duties in a way that minimizes illegal activities and reduces theft.
  17. Establish an anonymous tip program that allows employees to report questionable behaviour.

Caution: If you discover suspicious activity and don’t have concrete proof, get legal advice before confronting an employee. A false accusation can irreparably harm employee morale and could result in a lawsuit against your company.

Article Supplied by: Thomson Reuters
Brought to you by: Advivo Accountants and Advisors

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