Hallie Eu70056

Sadly, employee theft is extremely common. People steal office supplies in the fall (to use as school supplies for their children), deal with vendors who provide kickbacks (often in the form of expensive gifts and services), and sometimes even find clever ways to steal inventory and pilfer cash. Most people dont steal, but it does happen; so it makes sense for you to consider what you can do to minimize your employees opportunities to steal. Here are four easy tips:

Tip #1: Sign Checks Yourself

Its a good idea to sign all checkseven small onesyourself. This can be a lot of work (as a corporate controller, I used to sign about $100,000 of checks every week), but you can have an employee prepare the checks for your review and signature. The benefit of signing all your checks is that your signature will be a requirement for money to leave the business. No cash will be deducted from the business bank account without your knowing about it.

If you sign all checks, an employee who wants to steal cash from you might try to convince you to write a check that the employee can cash. But you wouldnt write out, say, a $1,000 check to the employee without asking questions. This means that the employee would need to set up a fictitious vendor and then convince you to pay this vendor some amount. Or the employee might have you pay someone the employee needs to pay anyway. (I saw an employee have the employer write a check that paid the employees Visa bill.) By carefully reviewing the checks that you sign, you minimize an employees opportunities for committing these crimes.

If youll be on vacation for, say, a couple of weeks, the business will probably need to pay some bills while youre away. You can deal with this in a couple of ways. You can decide to trust an employee enough to leave behind a signed check or two; the employee can then use these signed checks to pay for things such as an unexpected C.O.D. shipment. Or you can decide to simply require vendors to wait. If you leave signed checks, be sure to leave specific instructions as to what these checks should be used for, and review the checks when they come back from the bank to be sure that your instructions were followed.

Tip #2: Review Canceled Checks

Be sure to intercept the bank statement when it comes and review the canceled checks. (An easy way to do this is to have the bank send the bank statement to your home.) This way, you can make sure that no one is forging your signature and writing a check or two for nonbusiness reasons. This might seem unlikely, but if your business writes a hundred checks a month totaling tens of thousands of dollars, would you really notice an extra check or two if the amounts were only a few hundred dollars?

Tip #3: Separate Mailroom Duty from Bank Deposit Duty

One of the most common ways to embezzle money from an employer is called lapping. To lap, an embezzler skims a little bit of the cash that comes in each month and then adjusts the books to hide the skimming. As long as the person skimming the cash also maintains the checkbook, its easy for the theft to go unnoticed.

The embezzler simply ignores or hides the fact that, for example, the $500 Customer A owes you has been paid. You can minimize the opportunities for lapping if you have one employee open the mail and make a list of the incoming cash and another employee enter the bank deposit information into the checkbook. For this approach to work, you simply compare the list of incoming cash maintained by the mailroom person with the bank deposit information shown in the check, and you contact customers about past-due payments. This way, you can discover, for example, that Customer A actually paid the $500 owed and that the check has cleared the bank.

Tip #4: Protect Other Valuable Assets

From an embezzlers perspective, cash is the most convenient item to steal. Its portable, easy to store, and easy to convert to other things an embezzler might want. Because cash is usually watched so closely, however, embezzlers often steal other items of value, such as office equipment, inventory, and supplies.

You can follow a couple of general rules to minimize losses such as these. You can keep a record of the things that your business owns and periodically compare what your records show you have with what you actually hold. If you own a bunch of computer gear, for example, you might want to keep a record or list of the items.

You can also restrict access to any valuable assets that the business owns. Warehouses and storerooms should be locked. Access should be limited to people who really need what is being kept behind lock and key. If you have items of high value in a storeroom, for example, and several employees have access, its also a good idea to make it a rule that people go into the storeroom only in pairs. (A dishonest employee is less likely to steal if someone else is present who may see c

About the author: CPA Stephen L. Nelson is the author of numerous best-selling books about small business accounting and the popular downloadable do-it-yourself guides Information about the Corporation, and Costs & Benefits of Incorporation, Incorporating a Business in Texas, and Incorporating a Business in Washington.