Why are smaller firms more subjected to employee fraud issues?
According to Joseph Wells, ACFE’s chairmn, there are two general characteristics that make them especially vulnerable. • First, because of the closer relationship between the owner/managers and their employees, there is generally a higher degree of trust that facilitates the fraud of a dishonest employee. ACFE’s survey disclosed about 200 incidents where a “trusted” bookkeeper had simply stolen money from the firm in a scheme that often continued for many years. • Second, the financial controls are generally casual and unsophisticated. The refined security and audit procedures found in larger firms significantly reduce the level of fraud. According to security consultant Jack Deal, here are some key areas to look for: Be certain theft, pilferage or embezzlement is occurring or has occurred. The burden of proof is on the business. Courts are very unsympathetic to businesses that cannot prove an employee is guilty. Always consult your lawyer first. Something like a non-consent tape recor
