INTERNAL THEFT: THE INSIDE THREAT
By Ron Kern
Shadow Tracker's Investigative Service
http://www.shadowtrackers.com

 

It's bad enough when an intruder breaks into your plant at night or a

robber holds up your store, but when your own staff steal from you,

business owners are left dealing both with the loss and the betrayal of

trust.

 

Internal theft is a potential problem in any business. We're not

talking about an employee lifting a few pens from office supplies, but

of the methodical theft of merchandise and money - sometimes

thousands and thousands of dollars worth, until the employee is

caught.

 

The majority of employees, like most of society are honest. Even the

most trusting business owner can't ignore the possibility of internal

theft. Here are a few precautions to take to prevent light-fingered

staff from ripping you off:

 

Job Functions: Separate purchasing, receiving and

accounting roles to reduce the autonomy in any one job.

When two or more people are involved in a particular

function, instead of one, they would have to collude to

defraud you.

Purchasing: Centralize the purchasing function. Control

purchase orders by pre-numbering them (in sequence), and

get supporting documentation for each purchase of expense

invoice. Use pre-numbered cheques, so that all expenditures

can be tracked in sequence.

Receiving: Create and control a set receiving area. Count and

weigh all materials and compare the results with the shipping

documents. Use pre-numbered receiving control forms to

record shipments. Assign two people to verify each

shipment received: they will police each other (change at

least one of the people frequently).

Shipping: Use one employee to assemble an order and

another to check and pack it to minimize theft opportunities

(and errors). Seal cartons. Check merchandise as it is

loaded. Maintain records of stock movements. Conduct

frequent inventories.

Cash Control: Close the register after every transaction.

Provide receipts. Require verification of voided or

under-rings. Conduct surprise cash counts.

Key Control: Never leave office keys hanging on a nail or in

the lock, where they can be "borrowed" and duplicated.

Keep records of key use.

 

NEVER RULE OUT ANYONE!

 

By removing the opportunity you've greatly cut the odds of

becoming a victim. Staff steal not only because they can get away

with it, but because they have a financial need or think they're taking

what's owed them. To spot high-risk employees, look for:

 

Employees living beyond their means: there must be an

outside source of income - it could be company profits.

Rule breakers: an employee who habitually violates company

policy may not be trustworthy to handle merchandise or

cash.

Substance abusers: they often have financial pressures, or

they have overcome the psychological barriers of theft.

Chronic liars: experience shows that many liars also steal.

Immature or troubled employees: they may find an emotional

release in antisocial behaviours such as theft.

Wronged employees: they may get back at you for

grievances or perceived slights through stealing.

 

When investigating an internal theft you can never rule out anyone,

even long time employees. In fact, they may be more aware than

anyone of the weaknesses in the security system and the ways

around it.

 

Some owners are inclined to overlook losses suffered through

internal theft, or take it easy on the perpetrator - easier, certainly, than

they would if the thief was a stranger. By not pursuing the incident,

especially when losses are high, you set a bad precedent and only

encourage more internal theft.

 

It's disillusioning to find that a trusted employee has taken advantage

of you and broken the law. By implementing basic loss prevention

techniques, you can hopefully avoid this unpleasant scenario and

reduce the chances of becoming a victim of internal theft.

 

Written by:

 

Ronald A. Kern

President

Shadow Trackers Investigative Services
http://www.shadowtrackers.com

 

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