Quiz: Is Your Business at Risk for Employee Fraud?

Jul 08, 2013 by

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Employee Fraud

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.

Check Your Score

Count how many times you circled “yes.” How did you score?

  • 21-30: Your company is well aware of the risk of employee fraud and is working to protect itself. Use the statements you didn’t check “yes” to find ideas for even more safeguards.
  • 11-20: Your company has some protections in place, but it remains at risk. It’s time to step up your efforts to guard against employee fraud. Review the questions that you checked “no” for areas to focus on.
  • 0-10: Your company may be vulnerable to employee fraud. Take strong measures now to help protect your business by using the discussion points in this quiz as a guide.

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.

Recommended by the Editors: 

Hard work goes into every success. Talk to an agent about small business insurance to help protect all that you’ve earned.

About the Author

Melissa

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