The problem with smaller businesses is that fraud happens, and maybe more often that you would like to believe. The main reason it happens is that the business places too much trust in individuals who are often considered friends of the owner. Fraud can take many forms, it is not just stealing cash. Most businesses have inventory, even if it is only in the stationary cupboard. Many have assets that they don’t realise they have, such as waste materials or scrap that has value. Often they have accounts at the local gas station, or issue staff with credit cards. All need monitoring, or at least reviewing from time to time.
Why do they do it? In a recent case, where $3.5m was stolen, the thief told investigating officers she deserved the money because she was rising at 5.30am and returning home at 8pm. She said: “I saw the opportunity and thought: ‘Given the hours I work I deserve it’. If I went to work for another company I would probably be earning four times as much.”
So, have a think about your people and your systems and think ‘how would I steal from my business?’.
- Large amounts of cash in hand
- Small stock items with a high cash value
- Easily convertible assets (e.g. tools, vehicles)
- Failure to clearly separate key duties
- Employee awareness of future redundancies
- Disgruntled employees with access to significant assets
- Poor physical safeguards over cash and other assets
- Untimely or poorly organized documentation for transactions
- Lack of holidays for employees performing key control functions
- Missing or unexplained documents
- Inappropriate supervision, especially where employees are in remote locations
- Insecure company website
As in all things, apply moderation, don’t turn it into a witch hunt and frighten off your loyal employees, just be aware that people’s lives change and sometimes they do things that they later regret.
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