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Tips to Help Prevent Embezzlement
Because no business is exempt from employee dishonesty, we recommend bonding your employees who handle $$$. We provide dishonesty bond coverage to meet the needs of almost every size account. The US Chamber of Commerce estimates the annual cost of employee theft at over $40 BILLION, so the risk is very real.
- Check the back ground of prospective employees.
- Get to know your employees so they feel comfortable talking about financial and personal problems if the need arises.
- Have a cross check system for adding employees on the payroll.
- Have a designated person handle the mail and promptly record cash and checks received. Generally it’s a good idea to have an over-manager handle this job.
- Make the daily deposits yourself.
- Arrange for bank statements and other correspondence from the Bank to be sent to a different P O Box or address, having the reconciliation’s done by someone not making the deposits.
- Make sure the employee in a position to mishandle funds is adequately bonded. Let employees know that the fidelity coverage is a matter of company policy rather than the feeling of mistrust. If would-be embezzlers know that a bonding company also has an interest in what they do, they may think twice before helping themselves to your funds.
- Spot check your internal audit controls to satisfy yourself that all is well and the internal control system is working well.
- Personally approves unusual discounts and bad debt write-offs. Sport check credit memos, and the other documentation for sales returns and allowances.
- Don’t delegate signing of check and approval of cash disbursements if you can help it.
- Don’t sign blank checks.
- Have payroll and the actual paying of employees handled by different persons.
If you suspect a crime, investigate thoroughly to avoid false accusation. Obtain legal advice, notify your bonding company, and appropriate legal authorities and follow their advice.
And don’t forget about Computer related controls and cross checks. A creative embezzler could wreck havoc with neglect on your part to address it just as you do cash transactions.
The best protection is to have clearly defined controls and crosschecks, have independent audits, and carry a bond to defray the cost.
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