- INTERNAL THEFT: THE INSIDE THREAT
By Ron Kern
Shadow Tracker's Investigative
- It's bad enough when an intruder breaks into your plant at night or
- robber holds up your store, but when your own staff steal from you,
- business owners are left dealing both with the loss and the betrayal
- Internal theft is a potential problem in any business. We're not
- talking about an employee lifting a few pens from office supplies,
- of the methodical theft of merchandise and money - sometimes
- thousands and thousands of dollars worth, until the employee is
- The majority of employees, like most of society are honest. Even the
- most trusting business owner can't ignore the possibility of internal
- theft. Here are a few precautions to take to prevent light-fingered
- staff from ripping you off:
- Job Functions: Separate purchasing, receiving and
- accounting roles to reduce the autonomy in any one job.
- When two or more people are involved in a particular
- function, instead of one, they would have to collude to
- defraud you.
- Purchasing: Centralize the purchasing function. Control
- purchase orders by pre-numbering them (in sequence), and
- get supporting documentation for each purchase of expense
- invoice. Use pre-numbered cheques, so that all expenditures
- can be tracked in sequence.
- Receiving: Create and control a set receiving area. Count and
- weigh all materials and compare the results with the shipping
- documents. Use pre-numbered receiving control forms to
- record shipments. Assign two people to verify each
- shipment received: they will police each other (change at
- least one of the people frequently).
- Shipping: Use one employee to assemble an order and
- another to check and pack it to minimize theft opportunities
- (and errors). Seal cartons. Check merchandise as it is
- loaded. Maintain records of stock movements. Conduct
- frequent inventories.
- Cash Control: Close the register after every transaction.
- Provide receipts. Require verification of voided or
- under-rings. Conduct surprise cash counts.
- Key Control: Never leave office keys hanging on a nail or in
- the lock, where they can be "borrowed" and duplicated.
- Keep records of key use.
- NEVER RULE OUT ANYONE!
- By removing the opportunity you've greatly cut the odds of
- becoming a victim. Staff steal not only because they can get away
- with it, but because they have a financial need or think they're taking
- what's owed them. To spot high-risk employees, look for:
- Employees living beyond their means: there must be an
- outside source of income - it could be company profits.
- Rule breakers: an employee who habitually violates company
- policy may not be trustworthy to handle merchandise or
- Substance abusers: they often have financial pressures, or
- they have overcome the psychological barriers of theft.
- Chronic liars: experience shows that many liars also steal.
- Immature or troubled employees: they may find an emotional
- release in antisocial behaviours such as theft.
- Wronged employees: they may get back at you for
- grievances or perceived slights through stealing.
- When investigating an internal theft you can never rule out anyone,
- even long time employees. In fact, they may be more aware than
- anyone of the weaknesses in the security system and the ways
- around it.
- Some owners are inclined to overlook losses suffered through
- internal theft, or take it easy on the perpetrator - easier, certainly,
- they would if the thief was a stranger. By not pursuing the incident,
- especially when losses are high, you set a bad precedent and only
- encourage more internal theft.
- It's disillusioning to find that a trusted employee has taken advantage
- of you and broken the law. By implementing basic loss prevention
- techniques, you can hopefully avoid this unpleasant scenario and
- reduce the chances of becoming a victim of internal theft.
- Written by:
- Ronald A. Kern
- Shadow Trackers Investigative
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