06 Oct 15 Ways Employees Steal
A key role by addressing the issue of employee theft is to evaluate businesses. They can point out a particular firm’s exposure and urge these potential customers to adopt more stringent financial control practices.
Critically important for both underwriters and risk managers is recognition of the most common types of loss involving employee theft, and understanding of the most effective strategies for its prevention.
- BRIBERY: The giving or accepting of money or other things of value in return for promises to grant favours to the party giving the bribe.
- CORRUPTION: Dishonest practices, especially when committed by public or corporate officials.
- COLLUSION: A manager or executive colludes with employees to falsify organization data, such as monthly reports, or other illegal activities, such as price fixing.
- EMBEZZLEMENT: Misappropriation of entrusted money or goods with the intent to defraud the legal owner. Employees who simply siphon off money from a business usually accomplish it in one of two ways-reaching into the till to take cash directly, or forging signatures on company or customer checks that they can then deposit in their own accounts. Padding expense accounts is a form of embezzlement.
- FAMILY & FRIENDS: Giving away free product or discounts to family, friends, suppliers, other staff
- MILKING THE CLOCK: An employee falsifies his/her time card, or otherwise misrepresents hours worked, thus milking organization profits from others. This is otherwise known as time theft.
- PILFERING: An employee, who repeatedly steals small quantities of cash, postage, office supplies, products, organization services, and other organization assets for personal gain.
- PHANTOM VENDORS: Employees may set up a fictitious vendor, produce fake invoices and begin sending payments to themselves. A variation is for an employee to form a partnership with an actual vendor to split money that is paid for work that is not performed or supplies never delivered.
- SABOTAGE: The word “sabotage” originated in the Netherlands, where workers would throw their sabots (wooden shoes) into the wooden gears of the textile looms to break the gears. Some employee’s today, even managers, may commit sabotage to conceal their errors, to gain “comp” time, or to express their anger at their work, employer, or co-worker.
- SKIMMING: Management tries to conceal income to avoid the payment of taxes, or secretly diverts unreported profits for personal gain.
- SWINDLING: Members of management, including sales representatives who cheat or defraud customers, suppliers, investors, or others for personal gain
- THEFT OF IDEAS: Theft of ideas, designs, formulas and other trade secrets is a growing problem for many American businesses. Theft of an idea or a design affects all employees, because potential expansion is stymied. Canada as a nation can also be adversely affected whenever a stolen design is sold to foreign competition.
- TILL TAPPING: Stealing money from the cash register or organization till.
- VENDOR THEFT: A vendor/supplier of the organization offers an employee an inappropriate gift or money in exchange for personal gain.
- VENDOR KICKBACKS: A business may overpay for its supplies or services if a vendor is providing payments to an employee so that its bid will be accepted over other more competitive bids