Internal embezzlement presents a significant threat to companies, and keeping your California business safe requires a proactive strategy. By implementing strategic procedures, you can foster a more secure environment while protecting your business assets against employee misappropriation.
Tighten up internal controls
An essential step companies must take to avoid becoming victims of fraud is focusing on internal financial controls by segregating duties and assigning individuals to specific responsibilities. The goal is to prevent a single point of control, such as one employee with the authority and ability to cut checks, record accounting entries for them, and use their signature or a check-signing plate to sign a fraudulent check. Conduct audits periodically, looking for irregularities or discrepancies in accounting entries and other financial records.
Screen and educate employees
Before entrusting employees with your company’s valuable financial information, conduct thorough background checks to uncover any prior issues or risk factors that show the individual is untrustworthy.
Educate your staff on types of fraudulent activities and the company’s safeguards. Build awareness in your employees about the consequences of embezzlement and how it undermines the business, and reward integrity and honesty.
Implement technology access controls
Limit access to sensitive financial data and accounts. Minimize the number of individuals with user access to accounting and other financial software. Make use of user permissions within the software to limit which users can enter or edit financial transactions.
Become familiar with the various types of fraud so you know how to segregate duties and which financial system permissions to limit. Employees can embezzle funds by creating false invoices and generating checks to pay them. They might skim cash before entering receipts into the system or submit fictitious expenses for reimbursement. Employees with payroll access can create false timesheets or employees in the payroll system and produce fraudulent paychecks. These are some of the many ways employees have embezzled money from companies.
Monitor activities
Use surveillance tools such as cameras to monitor and record activity in office areas where financial transactions occur. Additionally, provide a confidential method for employees to report suspicious activities anonymously without fearing retaliation.
Take a multi-faceted approach to safeguard your business. Implement proactive strategies to defend against employee embezzlement to secure your company’s prosperous future.