In most offices today, securing customer personal information is a top priority because identity theft is a business run by professionals from around the world. We spend money on firewalls and anti-phishing software, scan and shred sensitive documents, and install cameras and alarms to keep intruders out.
But what about the people who carry office keys, have passwords and broad access to customer and business information? Unfortunately, it is the trusted employee who may pose the greatest threat to your business.
Consider that book-keeping involves a lot of repetitive, routine work that follows established procedures and generally doesn’t require direct customer interaction or “thinking outside the box." This is not the job profile for most entrepreneurs or for established business owners either. They hire people who like this kind of work to do it for them.
That’s one problem.
Another is that accountants and auditors are hired to compile information into reports (tax, management, etc), but not to detect fraud. They’ll tell you if they see it, but they also have to assume that the information you (or your bookkeeper) are providing is truthful. The fact is, detecting fraud is hard to do until long after it has begun; according to most auditors or accountants, it’s like finding a needle in a haystack.
Nothing can be gained by describing book-keeper fraud schemes here, but it helpful to name some very basic accounting techniques to reduce the risk of theft. Because most employee theft occurs with skimming from deposits or from writing phony checks, be sure that the person writing checks or making deposits is not the same person that reconciles the checking account balance (deposits made and checks written). If an owner or separate employee reconciles the bank balance monthly, the easiest thefts will become much harder.
There is another Human Resource technique that is almost too obvious to mention, but is often overlooked: checking references and running a background check. This should be a routine checklist item for any hire, with levels of detail in background checks related to the level of access to information or, in another example, entry into customers’ homes. Engage a firm who knows your business’s regulatory environment. We have used Safer Places for our Massachusetts business, and found their customized approach valuable here at Gordon Insurance where most employees have access to customer accounts and private information.
If you have a situation where your gut says, we’ve had a good quarter, but there just isn’t as much in the till as I expected, hire a forensic accountant. TraceTechSolutions is one resource in the Metro Boston area which uses a proprietary software tool to find that needle in the haystack. Their blog has several articles that get into more detail about forensic accounting, and how specialized software can spot most fraud within hours.
Risk is present in every business, but there are steps you can take to reduce the cost of risk to your business. Engaging professionals such as the risk professionals at Gordon Insurance is one way to keep ahead of the bad guys.