Having internal controls in your business are a necessary adjunct to a code of ethics, but systems that are poorly designed or go unmonitored allow fraud to go unnoticed. As a business owner, there are certain things you can do to reduce the risk of internal dishonesty.
What to Do
Eliminate outsiders first: Having a good security system and lock up procedures in place prevents outsiders and intruders. If something is stolen within the business, the culprit is most likely internal.
Unhappiness: Unhappy staff in the workplace tend to do things they would not do otherwise. Someone who feels ‘hard done by’ in terms of being unsuccessful for an in-house promotion or maybe they have been bullied inside the workplace may take it upon themselves to rebalance the ledger by being deceitful. Be sure that consistent management is evident within your business.
Small can grow into big: Most often, theft starts small and accumulates over a period of time until someone checks. A zero tolerance policy needs to be articulated and any instance of theft should e acted on to reinforce the policy.
Early Warning signs: Someone who fabricates their resume or is dishonest in their interview is likely to continue with their form. The same goes for information about previous jobs. Criminal and credit background checks and cross-checking references can go a long way in determining whether a person is really who they say they are.
Temptation removal: Remove temptation by removing cash or other assets from the workplace. Even honest employees are vulnerable to temptation. To decrease the risk of cash being stolen, be sure to bank and record cash regularly.
Splitting responsibilities: No single person should be responsible for the approval and reconciliation of functions namely accounts payable and accounts receivable. However, this can be easier said than done in micro businesses.
If you require assistance in setting up internal controls with your business or are would like advice on your current internal controls our lawyers at The Quinn Group can help. Call us to today on 9223 9166 or submit an online enquiry.
