If you are a business owner with fewer than 100 employees you may be more vulnerable to internal theft than a larger organization. The reason for this is not as many small business owners have the internal accounting controls in place like larger organizations do.

As a small business owner you need to put some thought into the ways in which an employee could rip you off and design ways to protect your business. Have policies and procedures in place to protect the business from your employees. If your employees know that you take fraud seriously and that anyone found violating company procedures and committing fraud or theft will be fired and/or prosecuted may prevent a host of issues.

It’s been estimated that close to three-quarters of all fraud within a company goes unnoticed. It can be as seemingly innocent as an employee taking home office supplies or “borrowing” from petty cash. Internal controls on office supplies as well as cash can get your company on the right track with setting up your internal controls and taking control of the potential for fraudulent activities.

Here are some internal controls to put in place to help prevent fraud and theft:make money

  1. Segregate duties and responsibilities. Have more than one person responsible for receivables, payables, and banking. If you don’t have that many people in your accounting department, consider outsourcing the reconciliation, review and reporting aspects of your accounting. That is what we call Your Remote CFO™.
  2. Make certain computer access and codes are protected and not shared. Regularly replace your computer passwords with those that are hard to crack. This is especially important if you let an employee go or if they quit.Only give staff access to information they need to have to do their job.
  3. When it comes to accounting, consider rotating the responsibilities at random intervals. This is also a great way to cross-train employees while helping lessen the possibility of fraudulent activity.
  4. Require your employees to be bonded.
  5. If something seems odd or out of character, trust your instinct. The employee who never takes a vacation all of a sudden starts taking expensive vacations; the employee who is suddenly sporting a new wardrobe. If anything seems out of order with invoicing or even with new suppliers, if your payables are rising without an increase in cost of goods sold, trust your instincts and check it out.

Your CPA will tell you that the best way to prevent fraud is with internal controls and with having an outside accounting firm on your team. That’s why over 75% of our clients are referred to us by their CPA. If you really think someone of your team is defrauding you, call an auditor and get your books thoroughly checked out.

Ask us about our Your Remote CFO service.

 

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