Call it fraud, profiteering or theft. No matter what it´s called, some people on the payroll are robbing companies across America each and every day. Employee theft now costs American businesses at least $40 billion a year, according to the latest estimates from the U.S. Department of Commerce. I see news reports every week about some small business being ripped off by an employee. Are they robbing your small business?
Mari Reidy, executive-in-charge of Crowe Chizek and Company´s Forensic Services and Investigations (FSI) practice, said businesses could save millions of dollars if they followed certain business practices, took fraud more seriously and responded to instances of fraud swiftly and aggressively.
You should take key steps to prevent fraud in your business. Here are a few tips Crowe Chizek suggests your business follow to keep fraud in check.
1. Lay down the law. Employees need to understand the rules and the expectations of management. Do not take for granted that employees will understand that making long-distance calls on company time is unacceptable. Develop a specific code of conduct that describes what activities are unacceptable. Distribute the code to all employees and include it as part of all new employee information materials.
2. Create an ownership environment. Employees who act and feel like owners of the company generally are less likely to steal. A culture of ownership promotes shared responsibility of company successes and failures and a more committed workforce.
3. Keep employees informed. Information about the implementation of new policies and procedures should not be contained to the boardroom. Make sure employees know and understand new policies and procedures. Share information about why policies and procedures have changed.
4. Take action. When fraud is detected, take swift action and then put controls into place to help prevent the specific type of fraud activity from happening again. Too often, corporations deal with the fraudster but do not look for ways to prevent similar fraud from reoccurring.
Have you experienced fraud in your small business? Please share your experience.
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I agree with all four of the steps you’ve outlined. What jumps out at me is item 3 keeping your employees informed. Informing your employees of possible infractions which can trigger disciplinary action is key if documented. When future violations occur you can refer back to the documentation and take immediate action. Which lead into your points 1 & 4.
Thanks J.P. Communication can go a long way in keeping a business fraud free. Thanks for stopping by and leaving your comments.
I agree with all four of the steps you’ve outlined. What jumps out at me is item 3 keeping your employees informed. Informing your employees of possible infractions which can trigger disciplinary action is key if documented. When future violations occur you can refer back to the documentation and take immediate action. Which lead into your points 1 & 4.