In the 21st century the most important asset of any company is its human capital or what’s better known as employees. Having motivated hard-working honest employees is what separates great companies from all the rest.

If you have worked in a retail store you may notice companies seem overly concerned about employee theft. When employees show up for work they are usually required to go in a separate location to place their belongings and are restricted as to how they can access inventory, gift cards and the cash register. The reason for this is that these retail franchises realize that the people most likely to steal from them are their own employees. Unfortunately, one little known fact is that every year over $50 billion is stolen by employees, in fact 75% of employees have stolen at least once from their employer. This is based on studies by the Association of Certified Fraud Examiners (ACFE). The US Chamber of Commerce has indicated that employee theft was a main factor in 33% of all US bankruptcies.

Who are the employees that are responsible for the theft? 59% are men and 34% have at least a bachelor’s degree.

Why do employees steal? Two widely used fraud assessment tools that explain this are The Fraud Triangle, opportunity perceive pressure and rationalization and the other is M.I.C.I which stands for money ideology, coercion, ego.

How to prevent employee fraud:

• Good hiring procedures
• Have a detailed employment application prepared
• Do a thorough check of employee’s applications including calling previous employers perform a credit check
• Make a copy of the import port and documents from the employee such as driver’s licenses and other information.
• Remember the formula employee theft probability = perceived risk of detection plus expected penalties
• Important to set up an anomalous tip lines and suggestion boxes
• Have a positive work environment have a clean desk policy
• Focus on the small stuff

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Robert A. Bonavito, CPA,
1812 Front Street
Scotch Plains NJ 07076
908-322-7719

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