Employee fraud can cost small businesses dearly. In fact, the median loss for incidents of employee fraud among small businesses is $147,000, according to research by the Association of Certified Fraud Examiners. Smaller companies are especially vulnerable to this type of fraud because they often lack safeguards to detect and discourage it.
Is your company at risk? Take this quiz to find out.
1. Yes No All cash not required for immediate customer transactions is kept in a safe that requires a code to enter.
2. Yes No Only authorized staff members know the code to the safe where cash and other valuables are kept.
3. Yes No The code to the safe is changed at least every three months or immediately after an employee leaves the company.
4. Yes No Two signatures are required on all checks above a specified amount.
5. Yes No Extra checks are stored in a safe place, away from checks intended for immediate use.
6. Yes No Checking accounts are balanced at least once a month.
7. Yes No An authorized staff member reviews activity on the company’s online accounts at least twice a week.
8. Yes No The company has a written policy explaining how company credit cards can be used.
9. Yes No Itemized receipts are required for all credit card purchases.
10. Yes No All credit card transactions and statements are reviewed at least once a month.
11. Yes No The company has a written procedure for initiating, authorizing, receiving and recording financial transactions.
12. Yes No Different staff members are responsible for processing and recording financial transactions.
13. Yes No The company’s financial information and accounting system are restricted to authorized employees.
14. Yes No Financial information on the company’s computer system is protected by complex passwords.
15. Yes No Passwords are changed at least every three months or immediately after an employee leaves the company.
16. Yes No An authorized staff member audits the company’s books at least once a year.
17. Yes No A manager conducts regular, unannounced audits of financial activity.
18. Yes No The company is insured against loss of income caused by employee fraud.
19. Yes No The company’s insurance coverage is reviewed at least once a year.
20. Yes No The company has a system that allows employees to report fraud anonymously.
21. Yes No The company has a written policy for employee travel that specifies how expenses should be reported.
22. Yes No Itemized receipts are required for all travel expenses submitted for reimbursement.
23. Yes No Employees report their use of company vehicles, and the reports are verified.
24. Yes No The company has a written policy that defines expectations regarding appropriate behavior and activities constituting fraud.
25. Yes No Each new employee verifies receiving and reading the company’s fraud policy in writing.
26. Yes No Fraud training is refreshed at least once a year.
27. Yes No The company checks the background of all applicants being considered for hire, including education, employment, credit report and possible criminal history.
28. Yes No Managers lead by example by demonstrating ethical business behavior.
29. Yes No Managers follow up on any indications of employee fraud immediately.
30. Yes No The company provides counseling and support to employees who are suffering financial or other distress.
Count how many times you circled “yes.” How did you score?
No matter how carefully you protect your business, employee fraud can still occur. It may be a good idea to consider business insurance to help protect your business from dishonest employees.
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