Theft…How To Prevent It In Your Business

Written by: Meghan Blair-Valero // October 30th, 2009 // News

Whole books could be written about how to avoid and prevent theft in a business environment. In a small blog we are only going to address the most basic steps a business owner can take to help prevent the theft of money by employees and contractors with access to your finances.

First it is important to understand that theft comes in many forms and it is not all cash missing from the cash register at the end of a shift. Funds can be stolen by those with access by writing checks to themselves, falsifying withholdings from earnings on payroll tax filings, lying on time cards, check kiting, and the old favorite pocketing cash and inventory.

#1. Reconcile the bank statement every month and review the reconciliation report. Check for deposits that have not cleared dated within the month reconciled, checks that do not bear an authorized signature, and checks that are for vendors and expenses you are unfamiliar with.

#2. Review balance sheets, profit and loss statements and statements of cash flow regularly for anomalies and large amounts in accounts like miscellaneous and uncategorized.

#3. Verify daily or weekly deposits with sales records. There shouldn’t be amounts in undeposited funds and the teller receipt should match deposit slips.

#4. Don’t allow employees to run their own payroll and file tax filings. Use a payroll service to provide a set of checks and balances even in the smallest of businesses.

#5. Create checks and balances where multiple people divide processes. For example make sure there isn’t one person who collects the mail, opens it, posts it, reconciles and reviews the accounts.

#6. Don’t use signature stamps.

#7.Utilize the user function in Quickbooks to create separate users and passwords for each person who needs access to your accounting files. This allows you to review audit trails and see who entered or changes what when and limit access only to areas of the program and levels of access within those areas.

#8. Use closing dates within Quickbooks. This prevents changes to periods you have already reviewed without your knowledge. It also prevents changes to periods that have been filed with the IRS and state.

#9. Review paper documentation. As you sign checks be sure there is a purchase order, bill or some other document to back it up.

#10. Require that journal entries be printed and signed off on by someone who understands them.

If you suspect theft bring in outside bookkeeping or accounting help to determine that theft has occured immediately and inform authorities. Letting this person move on to victimize the next business in no good for anyone.