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Recognizing and Protecting Against Employee Thefts

By January 26, 2018 Personal Insurance

Every year businesses across the country lose billions of dollars to employee theft.  Small businesses are particularly vulnerable to employee theft.  Many dollars are saved when business owners and managers make prevention a top priority.  Here are some tips from the Anne Arundel County Police Department on preventing employee theft:

  • Screen all employees prior to hiring them.  Closely check their references, particularly past employers.  The golden question “is this person eligible for rehire?”  An excellent resource is the Maryland Judiciary Case Search (http://casesearch.courts.state.md.us/inquiry/inquiry-index.jsp).  Although not a definitive source, it does provide an insight to any criminal or civil matters involving the applicant.
  • Upon hire, provide the new employee with written policies of what is and what is not allowed.   It should also define procedures to prevent misdeeds in your business.  The policies should be periodically reinforced with other longer term employees.
  • Watch for employees who:  Live beyond their perceived financial means; Habitually violate company policies; Have a suspected drug or alcohol abuse problems; Are seemingly trouble by outside issues; Employees who feel they have been wronged by the business
  • Have a robust key control system.  Only issue keys to those with a need and collect keys and business identification upon employment termination.
  • Make sure any key issued is a “Do Not Duplicate” key.
  • Beware of contract or custodial worker thefts.
  • Conduct regular unannounced audits:  Account for all checks (issued and unissued); Maintain strict control over check books; Limit employee exposure to cash and other valuable assetsAccount for all payment authorizations; Account for all vouchers and receipts; Account for any mechanism that authorizes or verify transactions
  • Scrutinize payroll policies: Persons responsible for payroll should not be involved in check distribution; Payroll should be audited for irregularities
  • Audits should be conducted to examine records to uncover any signs of non-existent vendors, irregularities in receipts or payment authorizations.

POTENTIAL INDICATORS OF THOSE INVOLVED IN INTERNAL THEFTS:

  • A significant change in spending habitsA noticeable increase in the employee’s standard of living
  • An unusual devotion to a job or work function
  • An employee with financial responsibilities who does not take earned vacations
  • Employees who object to procedural changes that could lead to closer supervision
  • An employee with financial responsibilities who refuses a promotion or transfer that would alter their current job functions