Preventing Employee Theft And Fraud

Preventing Employee Theft And Fraud

Your applicant walks in the door at the right time for their interview. They sit down, and give you all the indicators that they are the perfect fit for your job opening. You end up hiring this person.

A few years later, your accountant calls and explains to you that company funds have gone missing. The prime suspect, caught on video tape, was the employee that you thought was a great hire.

The person that has done an excellent job has been stealing from your company for years. How can you prevent employee theft?

Most of the time, it’s employees who feel shorted by the company are the ones stealing. It’s up to you as the owner to help them optimize their work environment by following the outline below. This will help reduce employee fraud and theft.

1. Run Background Checks

All new employees should be subject to a background check. This will allow you to pre-screen employees and see if they have a:

  • Criminal history – crimes that include theft, fraud or violence.
  • Civil history – including collections, any restraining orders or fraud.
  • Drivers license – check for how many violations and if they are serious
  • Education – verify educational degree from accredited institutions

2. Create a Positive Workplace

Establish policies and procedures that are in the best interest of the company. Write clear job descriptions so every employee knows their role. These steps will help prevent employees feel like they are being taken advantage of. An employee who feels shorted by the company or their supervisor is likely to steal.

3. Create An Anonymous Alert Reporting System

Sometimes employees would speak up against suspicious activity if they knew it wouldn’t affect their employment.

Example: It would be hard for a customer service agent to report to the CEO that they suspect that the office manager is skimming company funds. Failure to prove this might reflect the customer service agent in a negative light.

This reporting system should allow employees, customers, or even vendors to report suspicious activity anonymously.

You could even offer a monetary reward for any tip that helps prevent theft. If an employee knows that their co-workers are motivated to watch out for theft, they likely won’t do it.

4. Get To Know Your Employees

People who know each other are less likely to steal. If you connect with your employees and create a relationship with them, this will reduce theft.

By communicating with your employees, you might become aware if any of them are going through financial hardships.

A solution to this could be to offer them extra work or help them locate a local food back and charity services.

5. Install A Video Surveillance System

People will be a lot less likely to steal from your company if they see video cameras around and inside the building. A video surveillance system helps you monitor your business 24 hours a day, 7 days a week. This will help make employees think twice before stealing as well as providing proof for you to catch a theft after it happens. Be sure to use high-definition video so you can clearly identify employees to have the proof that you’ll need.

6. Internal Controls

These are a set of rules that safeguard operations and assets. Here are some examples of internal controls that you can use in your company.

Limiting access to information and systems. These access controls go hand in hand with separation of duties. Set policies on your computer system that users can only login and access certain areas that was in their job description


  • The accounting department is the only one that can access financial records.
  • Customer service is only able to access information that lets them handle customer inquiries and excludes private customer information such as Social Security numbers and client billing information.

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