Protecting Your Practice from Employee Theft

You may consider your staff an extension of your family. It's still important to have checks and balances in place to prevent employee theft and fraud.


Protecting Your Practice from Employee Theft

One of the greatest sources of confusion and conflict in an office comes from not having clearly written policies and procedures. That's why every practice should have a detailed, well-written employee handbook.

If you’re like most small businesses, you consider your staff an extension of your family.  After all, you spend a significant amount of time with them. You know them.  You trust them. So, you really don’t have to think about preventive fraud measures, right?


Did you know that companies with fewer than 100 employees experience 28% higher employee fraud losses than larger companies?* Or look at it another way: the Association of Certified Fraud Examiners (ACFE) estimates that businesses annually lose on average six percent of their revenues due to employee crime.**

In large part, the higher rate of fraud comes from the lack of simple controls and procedures that would protect your practice.  Here are some easy measures to put into place:

  • Assign your accounts receivable and payable to two different people.
  • Require new vendors and vendor changes such as addresses and accounts be researched and verified.
  • Keep original invoices to match up against payments.
  • Require two signatures on payments over a certain amount.  If it is an electronic payment, require notification and documentation.
  • Periodically review financial statements and bank reconciliations.
  • Never sign a blank check.
  • Do background checks that include a review of criminal records, as well pull a credit report (if allowable in your state) of any new employees that will be a part of the accounting activities.

Finally, make sure your employees understand you will prosecute any theft. This means having a written policy as part of the employee handbook that explains theft will be prosecuted accordingly.

Hopefully, you’ll never have to endure employee fraud, but the reality is that sometimes good people do bad things.  By implementing a few simple procedures, you’ll remove the temptation and reduce the likelihood of theft.

 * From Small Business Administration

** From Insurance Information Institute

The information in the NCMIC Learning Center is offered solely for general information and educational purposes. It is not offered as, nor does it represent, legal or professional advice. Neither does this information constitute a guideline, practice parameter or standard of care. You should not act or rely upon this information without seeking the advice of an attorney familiar with the specific legal requirements of the state(s) in which you practice. If there is a discrepancy between the site and an insurance policy you have with NCMIC, the policy will prevail.