The following is the copy from an article I wrote for the local San Diego Better Business Bureau Blog.
Guest Blogs: Sometimes the Scam Comes from Employees
10/30/2013 – A recent San Diego Union-Tribune article on insider theft reminded me that not all scams come from third world countries or swindlers in our own country; they can come from people you know very well… or thought you did.
I learned this from a friend long ago who could not stand the guilt and confessed to her boss that she had setup fake vendors and paid them, which in fact were setup by her and paid to her. Sometimes she paid herself more than her salary but changed the amount to the normal amount correcting and retyping the lower amount. She plead guilty in court, paid her boss back and was put on probation. I think she got off fairly lucky.
I took this lesson into my own company and setup simple measures to prevent issues like this. Though I trusted my accounting employee, I still thought it best to do modest procedural changes.
Following are ways to protect your company:
- Review all checks for vendors you do not recognize. Ask for the Purchase Order and documentation on questionable checks. There were many times I forgot the vendor but verified it with the additional paperwork.
- Personally sign the checks manually – do not use a rubber stamp or signature machine.
- If you receive copies of your cashed checks in the mail, do not let anyone open. Do it yourself and check each check for discrepancies.
- If paying electronically, speak with you bank how to set up protective measures.
If you suspect you may be a victim or if you want to get a better grip on your financials:
- Review a year of past checks.
- Print and review your vendor list for unknown vendors.
- Use an outside agency for payroll and audit the paperwork each month for hours, issues.
- Have your accountant or outside agency audit your books.
Don’t think this could happen to you? It can happen to any company, association, group, small or large companies along with many other groups such as Little League and other sports leagues have lost millions to embezzlers and thieves, all by people they trusted.
Check out the linked article and see how a trusted employee embezzled 5.7 million and put the company out of business. It can happen to anyone.