Issue link: http://psai.uberflip.com/i/873479
W E EKLY EDITION SEPT 13, 2017 Preventing Employee Theft …continued By Karleen Kos, PSAI Executive Director In my career I have twice had occasion to take over after predecessors have embezzled large sums of money, and I have also either personally discovered or been involved with the discovery of several other misappropriations – most smaller in scale, but one was large enough to send someone to jail for several years. Based on those experiences, I would add the following motivations for theft to the list: • Addictions: Gambling, drugs , and compulsive spending can drive people to get rather creative in finding funds to support their habits. • Genuine financial needs. Medical bills for a loved one, family members with special needs requiring equipment, care or supplies they can't otherwise afford, and simply not being able to earn enough money to support their family's genuine needs sometimes lead to desperate actions. • Character defects. Once in a while you meet someone who just has no conscience and will do whatever s/he can get away with. What can an employer do? Though the odds are against you entirely avoiding losses due to theft, there are a number of things you can do to minimize their effects on your business. Here are some suggestions from the nonprofit Service Corps of Retired Exec utives (SCORE). 1. Know your employees. Be alert to key indicators of potential theft such as: • Sudden, apparent devotion to work and working late. • Lifestyles well above salary levels. • Strong objections to procedural changes related to financial, inventor y or supply matters. • Drug and alcohol abuse. • Moonlighting or part time jobs that require materials, equipment, tools or supplies available at the business. • Evidence of compulsive gambling, persistent borrowing or bad check writing. 2. Supervise employees closely. Not surprisingly, studies show that when supervision is lax, theft and fraud rates go up. This doesn't mean looking over their shoulder every minute. But it does mean checking what they do. It's also wise to have more than one person looking out f or your money. It's a rule of thumb that two people can collude to accomplish theft or fraud, but it's much harder to sustain collusion involving three or more people. 3. Use purchase orders or other purchasing procedures that separate duties and accounta bility. The payment, receipt and preparation of purchase orders/authorizations should be separate functions and handled by different individuals. If you use purchase orders, use serially pre - numbered documents, and make sure you keep track of them the same way you would keep track of blank checks. Regardless of how you order or purchase, always verify incoming orders actually arrive, match the purchase documents, are appropriate for the business, and go into inventory. PAGE 14 CONTINUE D ON PAGE 15