Call 512-659-3179
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Call 512-659-3179
For Free Consultation
support@sageInvestigations.com

How to handle theft by employees and what to do to prevent theft in a small business setting.

President Ronald Reagan advised Soviet President Mikhail Gorbachev at the arms control agreement that he would “trust but verify;” so should a small business owner do. As a small business owner you must establish a culture of constant vigilance against employee theft. Here are 12 top tips to help you prevent employee or partner theft:

  1. Have company bank and credit card statements sent to your home or have a link emailed directly to you on a monthly basis. Review them on a regular basis. Even if you do not see anything unusual, ask questions of the employees handling accounts to let them know you are watching and to keep them on their toes
  2. Require monthly reconciliations of all bank accounts and review them, looking for anomalies such as checks that do not clear or deposits that are long-term outstanding
  3. Have your accountant review the internal controls of your business and suggest means to segregate duties
  4. Enforce cross training and vacation policies
  5. Never give full control of your finances to anyone including your bookkeeper, relative, partner, etc.
  6. Separate cash handling and banking functions from recordkeeping functions
  7. Control the use of check stock and your signature on the bank account.
  8. Never allow the bookkeeper to control the establishment of credit card accounts, and separate that person from the payment of credit card balances.  Embezzlements can occur from bank accounts or from payments on credit cards that are not monitored closely.  (Millions of dollars are stolen by the use of company credit cards.)
  9. Restrict access to payroll master files to prevent “ghost employees”
  10. Review vendor files and look for vendors receiving over $1,000 monthly; determine their veracity
  11. If using QuickBooks software, make sure the audit function is always employed by the software. If using QuickBooks online then you, the owner, should retain access and learn about what generally is needed to monitor your company’s operations. QuickBooks support will be very happy to help you understand their dashboard for your account
  12. Conduct formal background checks on all employees, and at least annually for anyone that has access to money

Remember, your small business is your responsibility. Stay on top of your cash and understand your business. If you are an absentee partner in a company, insist on access to the accounting system to view activities and access to the bank statements and credit card statements online. Protect yourself, and remember President Reagan’s statement “trust but verify.”

If you are a business owner in need of a forensic accountant to help monitor your company or your partner, call Edmond J. Martin Chief Investigator, at Sage Investigations, LLC or email edmartin@sageinvestigations.com or call 512-659-3179.