Preventing Employee Theft is Simple

As a forensic accountant having analyzed hundreds of employee fraud matters, I have found among them a shared theme: all could have easily been prevented.

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Fraud and the Small Business

Each year, we analyze a significant number of employee fraud cases involving small businesses. I've observed that employee frauds most frequently occur with moderately successful small businesses. In this context, the profile of a moderately successful business is one in which the owners enjoy an above-average living, but at the same time are not so successful to bring the need for a structured environment with layers of management.

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Burned Out-of-Sight Inventory May Hold Clues to Financial Motive

Sometimes, there are various financial incentives for a business owner or manager to commit arson at the business facility. Financial motive to commit arson can include the desire to liquidate excess or obsolete inventory, the desire to escape debt, or the desire to promptly stop an unprofitable venture. In the case of arson-for-profit, inventory is often times an integral piece of the financial motive puzzle.

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Internal Controls and the Five Senses

While many small businesses are plagued by deficient internal controls, protecting the business from fraud does not have to be an expensive endeavor. To a degree, sufficient internal controls are as simple as the five senses: sight, hearing, touch, taste and smell.

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