Organizations lose an average of 5% of their annual revenues to employee fraud. The Association of Certified Fraud Examiners (ACFE) published a recent report in which they found that the average fraud loss to medium and small businesses was over $55,000.
Top Employee Fraud Areas
Corporate Credit Cards
A common fraud risk is an employee using a corporate credit card for personal gain instead of legitimate corporate purchases or travel and entertainment expenses.
Lack of Accountability
Employees who have the ability to write checks and make deposits can create a major fraud potential for employers.
Payroll
Fraud can include phantom employees, paying for excessive overtime and even remaining on the payroll after death.
Identify Theft
This type of fraud includes employee theft of critical client information, and employees providing corporate data to external individuals.
Fraud Prevention
Complete background checks on all employees.
Include a code of ethics in your employee handbook.
Be watchful for things like reoccurring charges, employees who you don’t know you hired, expenses you don’t remember signing for, excessive voids, and duplicate payments.
Keep separation of duties for checking writing, check approval and deposits.
Do not allow employees to take lap-tops with confidential information away from office.
Have internal controls. Internal controls are the plans and/or programs implemented to safeguard your company’s assets, ensure the integrity of accounting records, and deter and detect fraud and theft.
Require all employees to take vacations.
Use an outside accounting/auditing firm to audit books every so often.
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Written by Belltown Insurance Agency Inc. on Aug 8, 2017