7 steps to stop theft

Recession fears lead mid-level employees to be more likely to press their luck with skimming a little off the top. Believe it or not, that may be good news.

When occurrences of fraud come from this particular avenue, there are plenty of steps a company can take to keep its finances protected:

1. Conduct seminars. The benefits of educating employees about fraud are two-fold: Not only does it instruct employees what to do if they come across evidence of tampering, but an in-depth course on prevention also dissuades individuals from trying anything in the first place.
2. Install a tip line. Depending on the situation, whistleblowers might not want to come forward unless they’re completely sure they’ve seen fraud — and by then, the damage could already be severe. An anonymous tip line encourages employees to report whatever they see as soon as they see it.
3. Pull credit reports on employees. Observing employees’ spending habits as compared to their income can give companies a primer on who’s most strapped for cash.
4. Divvy up the responsibilities. Giving fraud-sensitive duties to the most responsible and skilled employees might make sense, but it also increases a company’s risk of attempted wrong-doing. Separating check-writing and reconciliation duties among different employees keeps a system of checks and balances running.
5. Avoid budgets. They may seem like a smart place to hide excessive spending, but it’s too difficult to sniff out fraud by comparing budgets. They can inflate. One year’s padded T&E spend could be the norm for the following year.
6. Surprise! Nothing keeps security tighter than surprise audits. Whether it’s an internal committee or a third party, audits pick up on fraud earlier and square things away for next time.
7. Remember Benford’s Law. This “first-digit law” says that in lists of numbers, odds are good that the first digit will always be 1. The larger a digit is, the less likely it is to appear as a leading digit. It doesn’t always point to fraud, but it helps in spotting anomalies, whether in check numbers, payroll statements, vendor addresses, etc.