Employee embezzlement is a common crime that is difficult to detect. To prevent it, employers should perform background checks, implement a thorough security plan, and perform routine checks on employees. However, extreme measures can backfire and harm employee morale.
Employee embezzlement occurs when an employee steals funds entrusted by their employer. This common crime is often difficult to detect, as many embezzlers work very hard to cover their tracks. In order to reduce opportunities for employee embezzlement, you should use a thorough security plan with multiple safeguards in place.
Preventing employee embezzlement starts at the interview desk. If a prospective employer likes a candidate’s resume and personality, they can’t bother checking references or performing a background check of any kind. Since kidnappers tend to leave a suspicious trail from job to job, it’s very important that all potential new hires have references that can speak to the applicant’s honesty. In positions where the employee will have access to cash registers, deposits or other funds, it may also be wise to perform routine checks on all prospective employees to see if there is a past history of criminal activity.
While reasonable background research can help eliminate a potential for employee misappropriation, it cannot totally remove the risk. To further reduce the chances of internal theft, it becomes necessary to create a scrupulous security system that eliminates most opportunities for embezzlement. No employee should have access to all funds and, if possible, all financial reports and deposits. It should require at least two employees to independently evaluate and sign off the documentation.
Internal control can be a good way to reduce the risk of employee misappropriation. Performing a quarterly review through an independent firm can quickly unearth any signs of misappropriation or missing funds. Some experts recommend keeping audits random, rather than on a strict schedule, as an embezzler may be able to cover his tracks if he knows an audit is scheduled in advance. Internal auditing can also have the benefit of highlighting holes in an internal security system or problems with departmental efficiency, so a regular auditing policy can be beneficial to a business in many ways.
While caution and safety are important concerns, steps taken to eliminate employee embezzlement can backfire if employees are wrongly accused, or feel violated, spied on, or disregarded by safety policies. Imposing extreme measures such as constant camera surveillance or lying about security policies to “trap” thieves can destroy employee morale and confidence and lead to a very unpleasant work environment. If employees feel hostility towards the company for dishonest or disrespectful behavior, they may have more motivation to commit crimes or not to report suspicious activity by another employee.
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