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Are your employees stealing?

Coming up with an internal control system makes sure all the right numbers are being tracked and accounted.
By Henry Ong |
<>A tempting environment: An employee could simply circumvent the system and take advantage of loopholes in the process. Leaving the petty cash box unattended is a simple but ordinary occurrence. Or an employee may just avoid counting the inventory so losses cannot be determined.

Lack of integrity: Crooks justify their fraudulent acts with “I am just borrowing the money from the company and will pay it back later,” or “Everybody is doing it and nobody will get hurt anyway,” or “I need the money more than my boss does.”



Everyone in the company can commit fraud – from the rank-and-file employee to the manager. To spot a potential fraud, a business owner would do well to observe changes in his employees’ habits and lifestyle. He should also be on the lookout for changes in employee behavior – if they are becoming defensive or argumentative, blaming others for their mistakes, not being able to look people in the eye, sweating excessively, shying away from office mates or coming to work late.



The following is a list of red flags you should look out for:

•    Missing documents

•    Common names or addresses for refunds

•    Inventory shortages

•    Alterations on documents

•    Cash shortages

•    Increased due receivables

•    Duplicate payments

•    Unusual endorsements on checks

•    Unexplained adjustments to inventory balances

•    Unusual patterns in deposits in transit

•    Old outstanding checks or dormant accounts suddenly becoming active

•    Customer complaints


Henry Ong is president and COO of Business Sense Inc., a financial advisory and consulting firm that helps small and medium businesses. Ong is affiliated with INPACT International Network of Certified Public Accountants. You may reach him at or

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