Dawn M. Rosier CPA
Fraud reigns as one of the fastest growing and most costly crimes in the nation. Many of you reading this have already fallen victim to one or more of the crimes I’ll outline in the following articles. If you haven’t, you either don’t realize you have or it’s just a matter of time.
Disbursement fraud happens in almost all businesses to one degree or another. Through the daily act of writing checks, authorizing invoices, and purchasing goods intentional misappropriation has occurred, will occur, or is occurring now in your small business. It may be so small it forever goes unnoticed or turn out to be the catastrophic blow your business never recovers from.
As you read this, the global market has been shaken and the U.S. economy is in a steep decline. Therefore, your local economy may no doubt also have weakened. But believe me, employee fraud and abuse are increasing!  In fact, employee theft is rampant. Just ask any employee! As property values plummet, prices increase and unemployment rates climb, employees are stealing from their employers at alarming rates, and no company is exempt. From the small ranching community to Silicon Valley, every business faces this silent but deadly threat.
Fraud, by its very nature, operates under the radar. Fraud is always committed with the intent to conceal the truth, and therefore, many times (in fact, more often than not) remains undiscovered forever.  It’s impossible to estimate the dollars lost to employee fraud. According to the Association of Certified Fraud Examiners (ACFE), 5% to 7% of an entity’s gross revenue is lost annually to fraud. These numbers, however, are compiled only from reported crimes. When you factor in unreported crimes and crimes that go undetected forever, this number explodes exponentially.
Small businesses are especially vulnerable to employee fraud. Operating with only a small staff, they’re unable to properly segregate duties like a larger competitor can. But also, I believe, it’s due to the family-like atmosphere and trust that’s cultivated in most small companies. It’s only natural to become close to those you work with. When you spend your days with a small team of people, you rely upon and trust them implicitly. And it’s exactly that environment of cultivated trust that allows an employee to steal from you.
Face it. If you didn’t trust them, they wouldn’t be working for you. I’m not saying that all trusted employees are thieves, but . . . I’ve heard it time and again: “Susie was always the first one in and the last one out. She never took a vacation. She was our most trusted and valued employee.” The longer an employee has been with your company the more likely it is that person has established a place of trust with you. You may have had to downsize and combine several positions into one. You may have given numerous areas of responsibility to one trusted individual, inadvertently creating even more opportunity for a single employee to steal money or assets and conceal the thefts.