Employee theft is one of the most serious problems facing Australian business owners today. Unfortunately, employees who commit fraud or theft have typically worked within a business for several years before they begin to steal, and can continue for years before they get caught. Whilst the Wilson Pateras team hope that this isn’t the case in your business, we understand that unexpected incidents do occur – and they sometimes have costly repercussions. Our advice? Protect yourself and your systems! How? Read on!
In this month’s blog, we’re in conversation with Wilson Pateras’ SME (small and medium sized enterprises) expert, Nick Street (Principal). Nick helpfully unpacks what employee fraud is, illustrates how it can happen to your business and how best to protect yourself (with the help of Wilson Pateras’ professional team).
What Is Employee Fraud?
Simply put, employee fraud occurs when an employee steals from their employer. This can be financial or involve the misuse of an employer’s assets without permission. Assets can include money, time, information, supplies or company property. In most cases the perpetrator is a trusted, long-term employee. Typically, this employee will have been granted a high level of access to a company’s financial systems, such as business internet banking and accounting software. Oftentimes, the perpetrator will also have the means to cover their tracks and it can be a considerable amount of time before the fraud is discovered, if ever.
Can This Happen To My Business?
Yes, absolutely. A business of any size can be susceptible to employee fraud but small businesses that experience periods of rapid growth can be more at risk. Often, a small business will be conceived by a group of trusted family or friends, demand for their product or service will grow quickly with a corresponding increase in the number of employees. Business systems and internal controls often do not keep up with the pace of growth which can create vulnerability within the business. However, if employee accountability and business security is lax in any sized business, this can lead to an environment where fraud can occur.
How Can I Protect My Business?
The first step in protecting your business from employee fraud is to have comprehensive business insurance covering theft or misappropriation of funds on the part of the employee. This is often referred to as Fidelity Guarantee Insurance. Secondly, businesses should carefully design their internal systems to ensure there are checks and balances in place. Where possible, there should be accountability for every position in the company. No single employee should have the broad power to authorise financial transactions without the consent of a second individual. For example, one employee may input bills into the businesses accounting system, while another would be responsible for approval and payment of those bills.
How Can Wilson Pateras Support?
Wilson Pateras’ SME experts are available to conduct a full review of your business’ internal systems and processes. Our team will identify areas within your business that may be at risk or vulnerable to employee theft. We can then recommend ways to strengthen these internal processes to best protect your business. Get in touch with Nick Street and the team at Wilson Pateras for your free consultation.