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We have worked with many businesses over the years, proving that they are being defrauded by their accounts staff. The impact of such theft can be enormous – for example, the payroll manager at Clive Peeters stole over $20 million and bought 43 properties and 3 cars with the proceeds of her crime. Unfortunately, the most common response that we have seen is to sack the perpetrator, hush it up and allow them to move onto the next victim, rather than calling in the police.
And even if you do take the thief to court, you may not see your funds returned. So, it is better to avoid the problem in the first place. The following are some tips that you can follow to prevent theft in your business.

1. Don’t allow too much responsibility in the hands of one person

If one person is responsible for many processes, this can enable them to defraud the business. We saw an example of this in a small food business where the drivers brought in cash and the bookkeeper receipted the cash, then rounded the invoices to take the cents off hundreds of invoices every day before applying the payment to the invoice. This allowed her to steal up to 99 cents per invoice. It wasn’t a huge amount per invoice, but it gave her around $200 cash every day that she smuggled out.

Another example of this was where the bookkeeper was setting up the supplier details, including their banking details. She created a fake supplier, put in her banking details as the supplier’s banking details, she then sent bills to the business from a fake supplier, and the payments (made by a different employee) ended up in her bank account. She stole around half a million dollars over 3 years.

In the case of Clive Peeters, the bookkeeper inflated the payroll, and paid the difference between the inflated amount and actual amount into her own bank accounts.

So, the lesson here is don’t have the person who sets up the supplier banking details and payroll banking details also be responsible for making payments or creating the aba files. And with cash, be ultra-careful; don’t have the ability to alter invoices and don’t allow the person who raises the invoices also receive the cash and apply the payment and do the banking. Separate duties so that more than one person would need to be involved for theft to take place. This makes it far, far harder for the thief.

2. Don’t trust too easily.

Check the accounts, ask questions, look at banking details (check to see if bank accounts are duplicated on suppliers or employees), be suspicious if an accounts person never takes leave (as temporary replacements may spot the fraud), don’t allow employees to have the ability to process payments in the online banking and look to see if there are changes in behavior in your staff.
One employer we worked with trusted his bookkeeper, and had worked with her for years. When he got cancer, that was when she started stealing from him. He was too sick to spend time watching her, and that was when she took advantage.

3. Have an audit.

Bring in an external party to review your accounts occasionally – and mix it up. Your accountant may not be the right one to spot any anomalies. Get in a reputable and professional auditing or bookkeeping team sometimes. Don’t warn your staff in advance.

4. If you have stock, have regular stocktakes.

Too often, businesses don’t make the effort to have regular stocktakes. We have certainly seen instances where the staff have been stealing the stock and running market stalls on the weekend. Regular stocktakes, questions raised about missing stock, cameras in the stock areas can all reduce the amount of stock going out with staff.

5. Be suspicious if suppliers start calling and saying their accounts are overdue, when you thought they had been paid.

Have a look at the supplier statements sent in at month-end to see if there are any old bills showing as unpaid. You can also check with the ATO to see if BAS debts are mounting up. People stealing will leave less money in the business and genuine bills will go unpaid.

6. Use your accounting software to limit staff access to areas that are relevant to their role.

Don’t give administrator access to anyone. Make sure your passwords are secure and change them periodically. Never allow staff to share usernames and passwords. Set up options so that invoices can’t be changed.

7. Use outsourced bookkeeping firms that have procedures in place to prevent theft.

And check the references of any bookkeeper who you are working with thoroughly.

The vast majority of bookkeepers are extremely diligent, caring and honest people. But it is an area of temptation, especially for anyone with personal financial stresses, and there are people who will succumb. By being diligent as an owner or manager of a business, you can help reduce your risk.