Guarding Against Employee Fraud: A Business Imperative
Small businesses are inherently vulnerable to employee fraud due to the overlap of duties among a limited staff. A striking example of this vulnerability was recently highlighted when a business owner recounted how his administrative assistant illicitly increased her payroll hours, ultimately stealing thousands over several years. This malfeasance went unnoticed as the owner failed to compare the approved payroll reports with the actual bank withdrawals.
This example underscores the importance of either outsourcing payroll to a third party or, for larger organizations, implementing stringent internal controls. Third-party payroll providers can offer greater transparency with comprehensive reports that correlate staff hours with bank transactions, thereby minimizing the risk of fraud. For businesses that prefer to manage payroll internally, robust controls are necessary to prevent any alterations post-approval, along with regular audits to ensure fidelity between what is approved and what is executed.
At Verity CPAs, we offer internal control evaluation services. Contact us to strengthen your financial defenses: info@verity.cpa or 808.546.5026.