Are You Doing Enough to Prevent Internal Theft and Fraud?

Are You Doing Enough to Prevent Internal Theft and Fraud?
by Greg Fjetland

first appeared in Profit magazine

Employees steal from businesses more than shoplifters. Internal theft and fraud is widespread throughout every industry and represents a major challenge for business owners. Employee theft continues to be a source of bankruptcy and business failure. Take this quiz to see if you’re doing enough to safeguard your business.
1. Given that gambling and drug addiction is a major cause for employee theft, have you contracted with the services of a professional counselling agency and made their services available at no charge to your employees?
2. Since the best way to avoid employing a thief is not to hire him or her in the first place, do you conduct extensive pre-employment background checks that include examining of criminal records and calling references, and do you hire an external agency to do this if you’re too busy?
3. Do you tell new employee during orientation how important loss management is to the company and let new employees know that the company's theft prevention measures are tools to protect employees from false accusation.
4. Do you make company policies on theft, pilfering and misuse of company electronic resources - private emails, online games - well-known to all employees?
5. Do you develop a "culture of honesty" to preventing internal theft by building awareness about inventory shrinkage and theft issues, and do you provide a means for employees who observe illegal or inappropriate behaviour a way to report them?
6. Do you employ active loss prevention measures such as closed circuit cameras, and passive measures such as restricting access to certain areas and information?
7. Does your loss awareness and monitoring apply equally and appropriately to all employees, from casual employees to senior management?
8. Do you password protect your company computers and telephone accounts <<< TELEPHONE ACCOUNTS? CAN YOU TELL ME THE UNDERLYING RATIONALE HERE? (E.G., DO YOU WANT TO STOP PEOPLE FROM MAKING CALLS TO AUSTRALIA, OR LISTEN TO OTHERS’ VOICE MAILS? and have them changed frequently? Rationale is that hackers broke into my wife’s workplace 1-800 phone system (some workers hadn’t password protected their accounts and ran up thousands in long-distance bills. After the line was disconnected, phone calls came in for days afterward at the rate of two or three a minute.)
9. Do you monitor for “time theft” by noting times of arrival and departure, private telephone conversations, length of breaks and other sources of work loss?
10. Have you considered hiring a private investigator to deal with internal thefts instead of calling the police to minimize public disclosure?
11. Do you empty cash registers often so that there’s never more than sufficient cash in the till to cover purchases and have a drop safe system for depositing cash?
12. Because many thefts are done by ex-employees, do you have a key and alarm code control system that includes no-copy keys to allow for employee turn-over?
13. Do you require two signatures on all cheques, one of which is from a senior partner or officer?
14. Have you set up a system of internal controls that will deal with both receipts and payments to and from the company, such as having a senior company officer reconcile the bank statement monthly but somebody else sign the cheques?
15. Do you have your books audited annually by a certified accountant?