Employee theft is not uncommon in today’s workplaces, and it’s often the employee you least suspect that is the culprit. Speak with an employer or business owner any given day and there’s a very good chance you will hear about one or more employees caught stealing in some form from their place of employment. Some of these situations can sometimes be likened to asking a cat to look after a pot of fried fish.

Employee theft — pilfering, larceny, embezzlement, Stealing Business Opportunities, Skimming, to name a few — comes under the umbrella of what is considered fraud. However defined, the end result is the same: businesses suffer a loss because an employee unlawfully takes something from an employer. On average, it takes 18 months for an employer to catch an employee who is stealing. Most employee theft comes to the attention of the employer either by another employee or is revealed by accident.

Everywhere you go the employee thinks of the employer as fair game and from the day he gets on the job, his real mission is to beat the system, to find the loopholes in the flow of money and materials and exploit it. A poultry farm owner wanted to be nice to his staff and asked them to take home the cracked eggs from the daily eggs laid. The number of cracked eggs shot through the roof instantly. Another found out that his workers were wringing the necks of the chicken and throwing the carcass across the fence for a rendezvous once they close. I remember one fuel scarcity period when the diesel always finished fast from my trucks and the drivers always had a brother who had 50 liters or 40 or so for sale at a lower price. I was getting set to hire an engineer in a line of business and asked my more experienced friend for his thoughts. “All engineers are thieves”, he said casually, “you just aim at minimising how much they can cheat you”.

Every year millions of Naira is lost by businesses nationwide to employee fraud and theft and the number of incidents is rising. If your business is small, you’re especially vulnerable to occupational fraud and less able to absorb a loss than a larger business; in fact, it is not unusual for a small business to be bankrupted by the theft of a single employee.

In “How to Prevent Small Business Fraud: A Manual for Business Professionals,” CFE cites two key factors that contribute to the large losses suffered by small companies — lack of basic accounting controls and a greater degree of misplaced trust. More often than not it is the long-trusted employee — typically the small business’s one-person accounting department — who is found to be the thief. In other words, the person you least suspect is usually the one who commits the crime.


•    The first step to preventing employee theft is to screen job applicants thoroughly before hiring them in the first place. Background checks should be performed and should include a check on criminal history, as well as verification of education, past employment (including reasons for leaving), and references. Studies show that the more employees believe they will be caught, the less likely they are to steal.

•    Be clear with employees that your company has zero tolerance for employee theft of any sort. This includes not only outright stealing, but also things such as taking a long lunch break without approval, using sick leave when not sick, doing slow or sloppy work, or coming to work late or leaving early.

•    Write and distribute a company policy that outlines exactly what constitutes stealing. Contact your local police if you do discover an incident of employee theft so you send a message to your employees that stealing will not be tolerated.
•    Business owners and senior management must themselves be role models of honesty and integrity, or they may risk setting up a work environment that justifies illegal and criminal activity.

•    Avoid at all costs allowing the finances of a business to be handled and controlled by a single individual. Separation of duties is critical, and no employee should be responsible for both recording and processing a transaction; i.e., don’t allow the same person who sends out bills to collect the mail and prepare bank deposits.

•    Run irregularly scheduled surprise audits or have a third party audit your books once a year. Also insist that your bookkeeper or any employee who has access to monies take a yearly vacation/ break so you can examine their records.

•    Make sure all cheques, purchase orders, and invoices are numbered consecutively, and regularly check for missing documents.

•    Use a “for deposit only” stamp on all incoming cheques to prevent an employee from cashing them.

•    Personally look into customer complaints that they have not received adequate attention.

•    Most incidents of employee theft are revealed by coworkers, but many still are hesitant to report these incidents to their employers. Set up a system whereby employees may report employee theft anonymously. You may also want to consider offering rewards for informants while keeping their identify confidential.

•    Unopened bank statements and canceled checks should be received by the business owner or outside accountant each month and they should carefully examine for any red-flag items such as missing cheque numbers. They should also look at the cheques that have been issued to see if the payees are legitimate, and make sure that the signatures are not forgeries.

•    Require all cheques above a nominal amount to have two signatures. Never sign a blank cheque. Sign every payroll cheque personally. Avoid using a signature stamp.

•    Small business owners should take the time to review accounts payable by checking cash disbursements and payments. A very common scheme to look out for is billing-scheme fraud where an employee sets up fictitious “phantom” vendors.

•    Be alert to disgruntled or stressed employees, or those who have indicated that they are having financial difficulties. Also look for any unexplained significant rises in an employee’s living standards.

•    Keep a virtual eye on employees. People will be less likely to steal if they know that you are always watching. A CCTV or video surveillance system helps deter employees as well as catch theft after it happens. Be sure to include cameras in storage rooms and loading areas as well as in the store. Use high-definition video so you can clearly identify employees and transactions along with allowing integration with facial recognition software. This serves as a solution in stopping fraud and theft in the workplace.

A positive work environment has been shown to deter employee fraud and theft. Open lines of communication, positive employee recognition, and fair employment practices will assist in the reduction of occupational fraud.

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