Employee Theft Is More Common Than You Think

No one wants to admit that their loyal and trusted employees could possibly ever steal from themL Bookkeeper accused of stealing $60,000 from optometrist | INFORUM May 4, 2016 – DETROIT LAKES – The longtime bookkeeper at Morrison Eye Care here is accused of stealing more than $60,000 from her employer over a … But it happens.

ASCARS handout on Employee Theft – Excellent documentation of vulnerable areas.

Employee theft is defined as any stealing, use or misuse of an employer’s assets without permission. The term employer’s assets are important because it implies that employee theft involves more than just cash. In many industries, there are much more important things than cash that employees can steal from a company ..(Business Practical Knowledge)

Most people would think that employee theft is taking just cash. Theft is much much more: Taking Cash, faking records, skimming off the top, charging for items and not recording,  taking non-approved discount, free products, free supplies, giving discounts to friends and family, unauthorized spiff programs, faking on the job injuries for compensation, forging and destroying receipts, taking refunds, credit cards, shipping and billing scams, falsifying expense records and worse taking propriety information such as customer lists.

Fingalsen was previously convicted of second degree theft in 2009 and then put on probation, for the theft of approximately $41,000 from Mason City chiropractor Gregory Shirk. During that time, Mason City police said she embezzled $50,000 thousand dollars from from the office of optometrist Michael Heston. Image KIMT

Employee can also be charged for petty and grand theft and embezzlement. Employee theft is also a criminal offense and a civil tort. According to Employee Theft Solutions, the FBI calls employee theft ‘the fastest growing crime in America’

Eye Bogglers

  • $42 Billion a year in Shrinkage costs per year (missing goods from shoplifting and other causes)
  • 47% Employee theft was estimated to be responsible for in-store shrinkage.
  • 43% Lost revenue due to Employee theft or $18 Billion
  • $417.6 Billion per year=Employee theft
  • $403 Cost per household due to shrinkage per year.
  • $1,762.00 average dollar loss per employee theft compared to $265.40 for the average shoplifting incident. (2003)
  • 75% of employees steal from the workplace. (US Chamber of Commerce)
  • 33% of all US corporate bankruptcies are directly caused by employee theft.
  • 20% of every dollar  is lost in business to employee theft
  • 1 in every 28.2 employees were apprehended for theft in 2007
  • 55% of employee thieves are managers.

What To Look For or Red Flags

  • Declining profits
  • Inventory shortages
  • Rumors
  • Lifestyle above income levels
  • Complaints about bills

How to Prevent Employee Theft

  1. Establish good procedures for hiring, training and managing staff. Background checks and Drug tests are crucial, even if the hiree is recommended and or a friend.
  2. Show a commitment to put theft systems in place.
  3. Get rid of assumptions- Well paid employees and long term employees steal as well.
  4. Evaluate where employees can steal and put in stop-gaps to eliminate the temptation. Set up  a system of checks and balances. Do things like Check the trash, as employees may hide merchandise in the trash and retrieve it later.
  5. Work with optical staff and create a plan to discourage theft. This includes an open door policy so staff can feel free to speak. Whether it is a Employee Tip line or suggestion box.
  6. Theft can occur if employees are under financial strain. Create incentives and bonus programs.
  7. Create clear, consistent and comprehensive policies in dealing with employee theft. Policies should be in writing and openly discussed.
  8. Reconcile inventory and sales quarterly. Even have ‘surprise inventory’ check.
  9. Separate bookkeeping functions. Do not let the same person who processes checks, also manage the accounts receivables. Separate buying and bookkeeping functions- This maintains a systems of checks and balances.
  10. Approve any adjustments to the books, no matter how small.
  11. Limit the number of check signers.
  12. Review your bank statements yourself- in fact do it online and do not give out your password.
  13. Petty cash- Allow only a few to disburse petty cash. Require a receipt and a signed voucher to be submitted.
  14. Refunds- Issue refunds only on approval of a third party.
  15. Install mirrors and cameras.

More information can be found on employee thefts:

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