Commercial Insurance Blog

Employee Theft Prevention: MA Insurance

Prevent employee theft in your business office with commercial insurance from andrew gordon inc

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, the trusted employee may pose the greatest threat to your business, especially if they have access to financial data, and you’re not paying close enough attention.

Consider that bookkeeping 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; owners generally focus on customers and revenues and leave the details to others. 

Another is that accountants and auditors are hired to compile information into reports (tax reports, management analytics, 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, even long after it has begun. According to most auditors or accountants, it’s like finding a needle in a haystack. Especially if you don’t even know there’s a needle in that there haystack.

Nothing can be gained by describing specific bookkeeper fraud schemes here, but it helps to give one very basic accounting recommendation. 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.

Another human resource technique that is almost too obvious to mention, but is sometimes overlooked: checking references and running background checks. 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 especially valuable here at Gordon Insurance where most employees need access to customer accounts and private information to do their jobs effectively.

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 articles that detail forensic accounting and how specialized software can spot most fraud systematically.

Risk is 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.

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Geoff Gordon

 

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