Q. Dear Zenagos,
At my friend’s company, an accountant was stealing from the company. How can I keep my employees from stealing from me?
All business owners need to put controls in place to protect their assets. And, don’t assume it will be an employee who steals from you. Do an internet search on, “What if your partner steals from the company?” and you will see a long list of law firms that specialize in fraud committed by business partners. You can’t assume that you are safe from investors, either. The Association of Certified Fraud Examiners reports that 28% of small business owners experience fraud and 65% of fraud committed by owners or executives includes corruption (ACFE, 2018).
Put controls in place
The company bank account will be tempting to any person who gets in financial trouble. At first, the person who commits fraud may be convinced that it is just a loan, a temporary situation. However, people who have crossed that line – taking money to which they are not entitled – rarely return the funds.
“Trust, but verify” doesn’t work in business. The way to protect your assets is to ensure that they cannot be removed in the first place. Use common-sense safeguards (or “controls”) such as limiting the amount of everyday transactions and making sure that all checks need to be signed by two executives.
Protect anything that has value
Cash is an obvious target, but any item in your company that has value can be stolen. For example, raw materials in a manufacturing company can be sold to other similar companies. Make sure that you track inventory so that your raw materials cannot be easily removed and re-sold.
An “asset” is anything that has value – make sure that you look into all assets, not just physical assets. Look through your financials and examine anything for which you pay significant money. A clever person will see its value, as well. For example, an employee can steal leads (names of potential customers) and sell them to other companies. Or, an employee can take customer data (such as financial information or identity information) and sell it to a third party.
Don’t think that you can predict who will be trustworthy
When fraud occurs, the victimized parties are typically shocked. (If they weren’t, then the fraud could have been foreseen and prevented.) Fraudsters are generally good at creating trust and then taking advantage of it.
You can’t protect yourself from every possible scenario, but if you put some precautions in place, you will reduce the probability that you will be the con artist’s next masterpiece.
Association of Certified Fraud Examiners. (2018). Association of Certified Fraud Examiners Report to the Nations. Retrieved on July 18, 2022 from https://businessfraudprevention.org/fraud-statistics/