In a recent Entrepreneur Magazine article, business owners have collected their top suggestions for preventing occupational fraud, or fraud committed by employees, into four bullet points:
1.Establish a code of conduct to convey what is acceptable within an organization. Ensure that owners and upper management do not exempt themselves to set a proper tone-at-the-top.
2.Set up organization checks and balances. Office managers, bookkeepers and accountants with unrestricted access and control pose serious risk-of-loss. To minimize risks, segregate functions and conduct sufficient oversight and monitoring.
3.Institute policies to segregate duties and protect sensitive materials. For example, the person reconciling the bank statement should not be able to enter or modify transactions in the accounting system. Lock up sensitive documents, control custody of keys and computer access. Keep in mind that the ability to initiate an electronic disbursement is like having access to a blank-check and signature-stamp.
4.Watch employees’ behavior and pay attention to your gut instinct. Management should always investigate tips and inconsistencies, such as customer returns for repairs without record of original sale. Red flags for employee behavior would include not taking vacation, isolationist tendencies and giving a customer excessive attention.
See article in Entrepreneur Magazine at http://www.entrepreneur.com/article/244607