How to prevent employee embezzlement

According to the US Chamber of Commerce, “One out of every three business failures are the direct result of employee theft.”  In addition, it is estimated that the “typical” organization loses 5% of its annual revenue to fraud. It usually takes over 18 months for a fraud scheme to be detected, if then.  Much has been written about the “Fraud Triangle.” This is simply the fact that fraud in a business is most likely to occur when the following 3 situations exist:

1. Incentive – “I need money to pay the bills”
2. Opportunity – “I can work around the controls…I can do this and hide that”
3. Rationalization – “I deserve it because I work all these hours….I’ll pay it back”            

 What are the warning signs that something may be amiss?

     Employees that:

1. Overspend in relation to their salary
2. Insist on doing certain duties that involve access to assets
3. Do not take vacations

     Other signs:

1. Missing documents
2. Gaps in accounting records
3. Un-reconciled variances
4. Late notices from vendors
5. Customer complaints about incorrect posting of payments
6. Unusual patterns in bank reconciliations

So, what should we do about it? Here are some basic tips to help prevent fraud in the workplace:

1. Screen potential employees (perform background checks, avoid nepotism, check out references, etc.)
2. Be sure employees take appropriate vacations and someone else performs any critical duties in their absence
3. Rotate jobs, particularly financial duties, among employees
4. Have bank statements delivered directly to a responsible person unopened for their review
5. Review the work performed
6. Purchase adequate insurance
7. Establish a fraud policy – let employees know fraudulent activity will be prosecuted

Attempts at employee fraud and theft will continue to occur in the workplace, especially in difficult economic times. However, with attention to details and basic control processes, owners and management can minimize this risk. Please contact us if we can assist in helping you formulate fraud prevention plans.

Jay Pease - Audit Partner

Tech Tip - Windows 7 keyboard shortcuts for window positioning

These two keyboard shortcuts were totally new in Windows 7. They let you take advantage of Windows 7’s side-by-side window-docking feature. Pressing the Window key and either the Right Arrow or Left Arrow key “docks” the current Window to the side of the screen.  Which side the window moves to corresponds with the direction of the arrow that was pressed.  It’s easiest to just give it a try:

1. Click in a window to make it “active.”  Outlook is a good choice for this example.
2. Hold the Window key and press (and release) the left arrow key.
3. Your Outlook window will become “docked” to the left side of the monitor where it was located.  It will take up exactly half of the screen.

More experimentation:

1.  Press Window-Right Arrow and watch what happens.
2.  Press Window-Right Arrow a few more times and watch what happens.
3.  Press Window-Left Arrow several times and watch what happens.

By now you should be getting a feel for what this feature does.  You can use it to arrange multiple windows (programs) to the edges of your monitors.  This is a great way to position programs side-by-side so that you can work in and compare data – or simply so that you can keep your computer desktop organized!

Craig Rhinehart
Director of Information Technology

80th Anniversary - more fun facts

As our final blog regarding the celebration of our 80 years in practice, we will make one more trip down Memory Lane.  In the year 2002 (seventy years after our founding):

• Time Magazine’s People of the Year were Enron and WorldCom’s respective whistleblowers. Business will never be the same again.
• The country was slowly recovering from the 9/11 attacks only one year earlier. The world will never be the same again.
• On television, a new show named "American Idol" premiered
• Best movie – Chicago
• Also in the theatres – SpiderMan, Signs, My Big Fat Greek Wedding
• A Super Bowl ad cost $1.9 million
• Baseball Great Ted Williams had his head frozen
• Latest expression "What Happens in Vegas, stays in Vegas"
• Top of the Charts – Hot in Here by Nellie, U Got it Bad by Usher
• Also on TV – Joe Millionaire, ER, Friends
• Apolo Ohno and Bode Miller are USA stars at the Winter Olympics

We hope you have enjoyed this series of periodic events over the years. As our firm has just completed its 80th tax season, we reflect on our past with an eye towards the future. We continually look for ways to continue to provide exceptional service to our clients. The next 80 years will undoubtedly be different than the last 80, but as, always, we remain Committed to your Success!

Jay Pease - Audit Partner and Firm Historian