Preventing Employee Fraud

A survey by the Association for Financial Professionals showed in 2007, 71% of organizations experienced occupational fraud. And it takes 18 months on average for employee fraud to be discovered, resulting in significant losses. This trend of widespread abuse of corporate funds is worrisome. While the finance team should manage funds without having to police business spending, they often are at the front lines. Fortunately, just a few safeguard measures can help improve cash management, increase accountability, and prevent fraud.

1. Create policies that carefully protect sensitive information. This includes shredding all financial documents before throwing them out and educating employees on keeping passwords and documents away from potential prying eyes.

2. Check and double check bank statements and credit card purchases within a month of receiving them. This spending process audit is time consuming but arguably the most important step you can take. If the numbers don't match up, it's time to start asking some questions and time is often of the essence.

3. Set employee spending limits. If you have firm guidelines on what to spend for supplies, hotels, and other expenses, it's easy for employees to follow and easy for management to flag anything beyond the acceptable budget.