11/3/2003
Employee Theft
by Tammy Wedsted, Business Consultant, HSU SBDC
FBI reports that employee theft is the fastest growing crime in the U. S. One in three employees steal and it's rising 5% a year, costing U. S. organizations over $400 billion annually.
U. S. Department of Commerce statistics indicate 60% of new businesses fail in their first five years. One-third of those failures can be traced directly to employee theft.
Small companies are 100 times more likely to experience employee fraud than larger companies because of the more relaxed atmosphere and lack of internal controls.
Employee fraud can be reduced by establishing the following internal controls to help reduce the possibility of employees skimming.
- Establish and enforce an ethical conduct policy.
- Do reference, background and credit checks on new employees.
- Watch for lifestyle changes, and financial difficulties.
- Monitor inventory closely.
- Advise employees you maintain customer contact.
- Shift responsibilities, no single employee should have too much authority.
- Create a positive workplace and pay employees fairly.
- Allow anonymous reporting, without fear of retribution, give reward incentives.
- Conduct unscheduled audits and never allow company books to leave your office.
- Require a countersignature on company checks.
- Install alarms, cameras, and change locks when employees terminate.
- Get an insurance policy that covers outside crime, employee theft and computer fraud.
For more information on employee theft,
www.bankrate.com/qfn/news/biz/Biz_Ops/20001207a.asp
www.businessweek.com/smallbiz/content/may2001/sb20010529_956.htm
www.eyespy4u.com/statistic.htm
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