Minimize chances to steal from company
Published 08/19/05

Employers need to recognize the reality that not all of their workers may be honest and should take precautions to minimize the chance that a worker steals from the company.

One of the most costly thefts to an employer may be embezzlement of funds by someone with access to the company bank account.

The most basic example of this is when someone with check writing authority on the company account writes checks to themselves then also having first access to the bank account statements when they come in, destroys the processed check(s) payable to themselves that are enclosed with those statements, and enters a false payee into the company's records so that those payments appear to be to legitimate suppliers or vendors of the company.

A simple procedure to minimize this type of theft is to direct the company's bank to send all bank statements directly to the house of a trusted officer in the company who does not have check-signing authority and who does not enter the accounts payable into the company's records. The officer upon receiving those bank statements will review them along with the processed checks for any irregularities, and once reviewed will turn them over to the company's accounting department for processing and recording in the ordinary course.

Another source of worker theft is in inventory, equipment, and supplies. Sporadic, unannounced, internal inventory audits of equipment and supplies usually turn up any irregularities that then can be investigated further as necessary.

As for expenses, it is appropriate to require receipts and expense reports for expenses over a particular dollar amount to be prepared by workers prior to reimbursement. It would again be prudent to conduct sporadic, unannounced internal audits of an employee's expense reports to confirm that receipts submitted for reimbursement on expenses incurred on a business trip coincide with the date and location of such an actual trip.

All of such protective measures not only may catch a dishonest worker before he has an opportunity to further damage the company, but also act as a deterrent for those who may be so tempted to consider stealing from the company.

Employers should understand that not all worker embezzlement matters are criminally prosecuted and several are handled with private and confidential restitution agreements between the employer and the worker. These agreements do not become public so long as the worker complies with the payment schedule of the restitution agreement.

Since many owners of a company, after terminating a dishonest worker, are more interested in restitution than the retribution, such agreements sometimes make sense. However, this highlights the fact that such thefts, while in no manner commonplace, are more prevalent than as published in the media.

Employers should take heed that they are not immune of being victim of such thefts and should govern themselves accordingly.

J. Daniel Marr is a director and shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and business persons on a variety of legal issues, including employment, and advocating on their behalf. You can reach Attorney Marr by e-mail at: dmarr@hamker.com

This information is general information and may not reflect the most current legal developments, verdicts or settlements. The information provided should not be relied upon as an indication of the actual state of the law or of future developments. The information contained on the Hamblett & Kerrigan website is for informational purposes only and does not constitute legal advice. If the information referenced may be of legal importance to you, you should consult with an attorney to provide you with legal guidance and opinion as the the effect of the current law upon your situation.