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  • By Lauri Paxton
  • 18 Nov, 2013
Part I of Safeguarding Your Business discussed how to set up controls to eliminate theft.  As we move into Part II of this blog series, we will identify what to do if you suspect theft is occurring in your business.
Since the start of the recession, business crime has risen as people increasingly struggle to make ends meet. There is a risk that the difficult economic conditions will also increase incidents of staff theft.  The signs that someone is stealing from you might include stock disappearing, a laptop going missing, your tills never seeming to reconcile or unaccountably high phone bills. But before taking any action you need to confirm your suspicions.
In the past three years, according to the Society for Certified Fraud Examiners, the average size of small business fraud has increased by nearly 17%.  That should get your attention, because fraud and theft occurs in more than 35 % of all small businesses.  One out of three business owners has theft occurring in their business.
If you choose to investigate, it’s wise not to tip your hand to let people know you are suspecting theft.  Some investigative measures might range from keeping a closer eye on the workplace via security cameras to putting marked notes in a till, or carrying out computer audits.   Whatever you do, ensure you are even-handed about it. Failure to do so could result in a discrimination claim against you.
One of the most common types of fraud is accounting fraud, and one of the simplest tactics internal accountant staff use to steal money is called “double checks.” This occurs when two checks are recorded paid to the same vendor, however they are actually written to separate payers.
Match up the checks with the bill and make sure the expense amount matches the expense on the P&L.  Then make sure all of your balance sheet accounts are completely reconciled.  If you are unsure on how to do this, or don’t have time, hire an independent outsider to verify that it was done.  Repeat this process randomly at least three of four times per year.
Consider these tips to ensure you are protecting your business assets:
  • Separate duties of employees handling cash, accounts receivable and accounts payable
  • Store checks in a secure locked location
  • The Owner or Manager should sign all checks
  • Bank statements and credit card statements should be given UN-OPENED to the Owner or Manager for initial review
  • Within 48 hours of receipt of statements, the Owner or Manager should conduct the initial review.  If time constraints are a factor consider outsourcing this to a bookkeeping service.
  • Bank statements should be reconciled and discrepancies followed up on by someone other than the person responsible for issuing the checks.
  • Monitor petty cash and receipts closely.
  • Carefully select staff who will be handling checks and cash.  It is recommended that new hires complete a background check before hiring.
These few simple steps and added vigilance can help you prevent a potentially devastating and unnecessary hardship to the business you’ve worked so hard to build.
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