A recent report issued by the association of Certified Fraud Examiners, places the cost of employee fraud at 7% of annual revenues. Employers with less than 100 employees saw a median loss of $200,000 according to the ACFE.
Employers need to have an understanding of the many types of fraud most commonly used by employees to steal from their employers.
Theft of inventory- This is commonly known as "shrinkage of inventory". It is not limited to just materials or goods, it also applies to office supplies and even office equipment.
Vendor kickbacks- Employees set up overpayments from vendors then receive payments in cash or in the form of goods and or services, including trips.
Padded expense accounts- Employees can pad expense accounts, use fake receipts and even purchase personal items.
Embezzlement- Employees simply siphon off money from a business by setting up fake accounts, stealing cash, or forging checks they deposit into their own accounts.
There are some things you can do to protect your business:
1. Complete background checks on all employees
2. Separate accounting duties by splitting up check writing and deposit responsibilities
3. Require two signatures on checks over $250
4. Add a third person to reconcile books
5. Have an outside firm perform annual audit
