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Employee Theft
- 1. Employee Theft By: McKenzie Waldron, Sebastian Hutman, Brandon Curtin, Shaikh Alamin-Khashoggi
- 2. What is Employee Theft? Employee Theft: the unauthorized taking, control, or transfer of money/property from the work place, by an employee. • Small businesses are more vulnerable • The reason why 1/3 of businesses fail each year = employee theft • It takes 18 months, on average, to catch an employee who is stealing
- 3. 10-10-80 Rule 10 percent of people will never steal no matter what, 10 percent of people will steal at any opportunity, and the other 80 percent of employees will go either way.
- 4. Types of Employee Theft 1.Larceny is the stealing of cash or property. 2.Skimming is stealing before the cash or property is recorded in the company's books. 3.Fraudulent disbursements- schemes in severals forms; ie: billing and payroll Employee Theft can happen in many ways. Some of the most common are listed below.
- 5. Combating Employee Theft How to protect your business: 1. Perform background checks on applicants 2. Consider giving an "honesty test" 3. Supervise employees 4. Make it difficult for employees to steal 5. Make a fraud-avoidance plan and set the rules 6. Be alert to disgruntled or stressed employees, or those who have indicated that they are having financial difficulties
- 6. Cutting Edge Solutions to Theft Problems 1. Problem: Taking $ from the register Solution: Internet Protocol Cameras 2. Problem: Pilfering products Solution: Radio Frequency ID Tags 3. Problem: Cheating on time cards Solution: Biometric ID System
- 7. Avoiding a Lawsuit 1. 1. Conduct an investigation to determine if an actual theft occurred. 2. Figure out the extent of the theft and the methods used. 3. If you discover a theft and can pinpoint the employee doing the stealing immediately, eliminate his or her access and/or remove him or her from the workplace. 4. Try to recover the money or property (Check insurance policy). 5. Take preventative actions to avoid theft and losses from happening again.
- 8. References • • Barling, J., Greenberg, L. (n.d.) Employee theft. Retrieved from http://web.business.queensu.ca/faculty/jbarling/chapters/empl oyee%20theft.pdf • NFIB the voice of small business. Retrieved from http://www.nfib.com/business-resources/business-resources- item?cmsid=29624 • Pullen, J. (2012, October 24). Entrepreneur. Retrieved from http://www.entrepreneur.com/article/224728 • Schaefer, P. (2012). Business know-how. Retrieved from http://www.businessknowhow.com/manage/employee- theft.htm
Editor's Notes
- *Employee theft is the unauthorized taking, control, or transfer of money or property from the workplace done by an employee. * 2 of the most common reasons that theft is so easily committed is lack of basic accounting controls in place and the owner of the business misplacing trust in one single employee- it is usually the person they least expect.. *Small business are more vulnerable and are more likely to go bankrupt from a single employee stealing from the business. * According to the U.S. Department of Commerce, about a third of all business failures each year trace back to employee theft and other employee crime. *On average, it takes about 18 months for an employer to catch an employee who is stealing. *Security experts say that as many as 30% of the average company's employees do steal, and another 60% will steal if given a motive and opportunity. *Some estimates indicate that more than $600 billion is stolen annually, or, roughly $4,500 per employee.
- 10-10-80 rule: 10 percent of people will never steal no matter what, 10 percent of people will steal at any opportunity, and the other 80 percent of employees will go either way depending on how they rationalize a particular opportunity.
- Larceny is the actual stealing of property or cash. This is often the easiest to detect because the cash or item usually has already been recorded on the books and adequate controls usually exist. But different ways this can happen include pocketing loose change, or stealing goods before they reach the shelves. Skimming is the embezzlement of cash before it is even recorded on the company's books. This can happen when an employee has the customer pay him/her directly for goods or service. Receivables' skimming is when the amount owed is reduced on the books by write-off schemes. Over-billing can also happen, with managers who have expense accounts and may submit receipts twice and then are reimbursed twice or who inflate the expenses. Fraudulent disbursements. These take several forms, including billing schemes, payroll schemes, register disbursement schemes, expense reimbursement schemes and check tampering. In retail, for example, salespersons can charge a customer one sum, ring up a receipt for less and pocket the difference. Other schemes include fake payrolls (paying a person who does not exist) or purchasing fraud (where employees pose as suppliers of goods that don't exist and then reimburse themselves).
- Perform background checks on applicants. Background checks should include a check on criminal history, civil history, driver license violations, as well as verification of education, past employment (including reasons for leaving), and references. A credit check would be another good option. Consider giving an "honesty test." These are standardized, commercially available written tests that are psychological evaluations of an applicant (or even a current employee). While many believe these tests help keep out people with a propensity to steal, you need to be aware of the flip side: That many feel that these tests can be inaccurate and violate privacy and civil rights. Supervise your employees. Research has shown that businesses with low levels of employee supervision show high rates of employee theft. Don't be hyper-vigilant, but do keep your eye out for the telltale signs of theft, such as a rise in an employee's spending habits. Remember to be extremely careful about making accusations before conducting an investigation—a false accusation can result in a lawsuit against you. Make it hard to steal. Don't allow only one person to deal with money. Conduct unscheduled inspections or audits of inventory and bookkeeping. Monitor bookkeeping records carefully. Separation of duties is critical, and no employee should be responsible for both recording and processing a transaction; i.e., Don't allow the same person who sends out bills to collect the mail and prepare bank deposits. Make a fraud-avoidance plan and set the rules. Every company, public or private, needs to develop a fraud avoidance and assessment plan and set the rules for consequences if an employee is caught embezzling money from the company. Proper planning will make sure that all employees know where the company stands in regards to employee theft and will give business owners the confidence to handle employee theft properly should it occur. A plan should include: pre-employment and periodic background investigations, periodic checking and changing of computer passwords, internal and/or external auditors and the consequences of theft.
- 1. Problem: Taking $ from register. Solution = Internet Protocol Cameras. the service can use up to six cameras and costs between $19.95 and $39.95 per month. Features include motion detection triggers, text and email alerts, cloud storage and simultaneous viewing on multiple devices. 2. Problem: Pilfering Products. Solution: Radio Frequency ID Tags. These tags come in two varieties that readers can detect either up to 40 feet way or up to 300 feet away. 3. Problem: Cheating on time cards. Solution: Biometric ID systems. It uses fingerprints, facial recognition, RFID badges and web interfaces to track employee time on the job.
- It is important to not wrongfully accuse an employee of theft. Follow these steps to prevent a lawsuit. Conduct an investigation to determine if an actual theft occurred. Figure out the extent of the theft and the methods used. If you discover a theft and can pinpoint the employee doing the stealing immediately, eliminate his or her access and/or remove him or her from the workplace. Try to recover the money or property (Check insurance policy). Take preventative actions to avoid theft and losses from happening again.
- These are our references. Are there any questions?