At least 5% of your Profit is being stolen every day!
* Theft – the action of stealing; taking something without permission
* Fraud – wrongful or criminal deception intended to result in financial or personal gain
Both these crimes are based on a violation of trust, and the more that you trust someone, the more you should have your guard up. Many cases have involved family members, people who have known each other since childhood, or even the best man at your wedding; there are no boundaries.
The American Association of Certified Fraud Examiners estimates that the typical business will lose an average of 6% of revenues to employee thieving money and goods; worse still, small businesses suffer disproportionate losses because of the limited resources they have to devote to detecting these crimes.
Stock theft is also very common, and is often misconstrued as theft by customers.
Time theft is the final consideration. When employees take work time to check their personal e-mail, text with friend, go on Facebook, Twitter or other social media platforms, or just simply take unauthorized breaks, they are stealing time since they are not doing the job they are being paid to do. According to the FBI, this type of theft costs all U.S. companies a combined $500 billion annually. Add to that other types of theft such as using company equipment for personal use and the problem adds up to big costs for companies.
Studies show that perpetrators of workplace crimes do so because they are either under pressure, feel under-appreciated, or perceive that management behavior is unethical or unfair, and rationalise their behavior based on the fact that they feel they are owed something, or deserve it. Consequently, these crimes are occurring more often as a spouses loose jobs, there is a threat of home foreclosure, or a struggle to pay bills. And once someone has a reason to feel unsafe, the next step is figuring out how to exploit the system to fulfill that need.
4 Keys to Prevent Internal Theft
There are many ways that employees can unlawfully enrich themselves, so have controls, policies and procedures in place to minimise the losses.
Implement Internal Controls
Internal controls are measures that ensure the effectiveness and efficiencies of operations, compliance with laws and regulations, safeguarding of assets, and accurate financial reporting. These policies and procedures should address the following points.
- Separation of duties: No employee should be responsible for both recording and processing a transaction, or ordering and accepting goods.
- Access controls: Access to physical and financial assets and information, as well as accounting systems, should be restricted to authorized employees, with authorisations being varied from time-to-time
- Authorization controls: Develop and implement policies to determine how financial transactions are initiated, authorized, recorded, and reviewed.