How to detect the tell-tale signs of employee theft



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    Employee fraud is a growing problem for businesses. The number of major embezzlements in America was up 11% in 2012 on the previous year, and the average size of theft went up to $1.4m from $750,000, according to research. Firms can help protect themselves from crooked employees by knowing what to look out for and by having an insurance policy that will cover them if problems occur.

    Many companies screen new hires by carrying out criminal background checks, but it’s also worth monitoring existing employees from time to time, because members of staff may have been arrested without their boss’s knowledge. It was only through doing such a check that one company discovered that a member of staff had been convicted of assault, as the employee was serving his sentence on the weekends.

    Savvy employees can exploit weaknesses in accounting software programs, so using data analytics software can help pick up on dubious transactions. In a recent case, an employee was writing company cheques to himself for amounts that were all round numbers (for example, $25,000 or $500). Those should stand out as suspicious because most invoices won’t be for precise figures.

    Members of staff can also create phony contractors and start submitting invoices, having the money paid into their own accounts, so it’s worthwhile occasionally checking your payroll records against the account details of the third-party firms that are billing you for services rendered.

    Companies should also do occasional spot-checks of expense submissions, to uncover any bogus claims. A number of websites have sprung up that can provide fake expense receipts, including entirely made-up travel itineraries, including flights, car rental receipts and hotel invoices.

    You may have no reason to be suspicious of your staff members, but it pays to be vigilant, as it can take months – or even years—for an act of fraud to be uncovered, which could really hurt your firm.

    Image credit Alex Skopje

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