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Train employees to recognize common


behavioral signs that fraud is occurring. According to ACFE, the most common behavioral red flags are employees living beyond their means (43% of cases) and experiencing financial difficulties (36% of cases).


Provide anonymous counseling Keefe suggests that business owners


offer anonymous financial and counsel- ing programs. “It’s cheap and effective. Six sessions might cost about $500.” Keefe notes that rationalization, oppor-


tunity and pressure can put otherwise good people on a bad course. Sometimes a person might be short of money and keep track of thefts with an IOU and the inten- tion to repay. But, as time goes on, the rationalization to pay back drops away, she says. Others may feel pressure from personal problems or just take an oppor- tunity if cash is left out. The conduct of the business owner


also figures in. If you, as the owner, take money or products for your personal use, your actions allow employees to feel jus- tified in their stealing.


Subscribe to a hotline You’ve educated your employees.


Now offer them a way to report question- able activity. In ACFE surveys since 2002, tips caught three times as many frauds as any other form of detection. Where a hotline was in place, the


average duration of a fraud scheme was reduced by 7 months, and the median loss was reduced by 59%. Costs for hotline services vary. Some


have an implementation charge. All have an annual service fee. Access features, number of locations,


number of reports and number of employ- ees are among the items that may affect hotline costs. Fees might range from less than $400 to about $2,000 a year for a small business.


Establish policies and procedures Small businesses often view policies


Trends magazine, April 2012


and procedures as being inconvenient and therefore elect not to provide them in writ- ing, or write them so they do not offend employees, says Bruce Ramm of Security Design Concepts, Inc. of Orange, Calif. “Employees sometimes interpret that


as the business owner really doesn’t care. They can take money or products, and justify the action,” says Ramm, an IAPSC member with more than 35 years’ experience as a police officer and secu- rity consultant. Establishing these rules is a positive


step that doesn’t have to cost anything, says Ramm. While they will vary by clinic, all of them need to include separa- tion of duties. Work with your human resources per-


son or business attorney in setting the rules. Potential hires and employees have a right to privacy in certain areas. Policies and procedures might look at: Having an employment policy for employees to sign. Consider whether random drug testing should be included. Keefe suggests that if you plan to install cameras, have a clause saying that employment includes no expectation of privacy. Employee permissions are needed if you want to use consumer reports on employment decisions. Check state laws and Federal Trade Commission requirements to comply with the Fair Credit Reporting Act.


Hiring employees only after thorough background checks. Former employers may be reluctant to say anything negative, so Ramm proposes simply asking them if they would rehire the person. He also suggests checking Facebook and other social networking sites. Be aware of laws that cover use of credit reports or criminal records, according to the Small Business Administration.


Regularly updating employee files. Changes in address may point to financial or marital problems.


Where a hotline was in place, the average duration of a fraud scheme was reduced by 7 months, and the median loss was reduced by 59%.


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