Do You Really Know Who You Are Hiring?
By Universal Underwriters Group's Loss Prevention Department

Background checks can help

"I can't believe that employee would steal $100,000 from us….he was like one of the family."

It's a fact of life, employees handle large amount of cash at most businesses. They may also have access to parts, supplies, equipment, vehicles, customer credit card numbers and your own business checks. The potential for internal theft is extensive and difficult to control. Some believe that the proliferation of gambling across the country may be adding to this problem.

You need employees you can trust and strong internal controls for accountability. Hiring the best people available to the first step to controlling internal theft at your place of business.

Hiring Policies

When implementing the practices outlined below, businesses must comply with all guidelines set forth by the Fair Credit Reporting Act (FCRA) throughout the hiring process.

• Obtain a resume from applicants whenever possible to determine if they are qualified to apply for the position they are interested in.

• All applicants should complete a full comprehensive employment.

• At least two managers or owners should interview each applicant to verify information on the application and/or resume.

• Verify work history by contacting former employers.

• Check references provided by job applicants.

• Obtain transcripts to verify educational background. These should be requested by the applicant and sent directly from the school to you.

• Conduct a criminal history check on those applying for positions that involve money handling.

• Require prospective employees to bring their Motor Vehicle Record (MVR) to their job interview.

• There are vendors that perform background investigations at a reasonable cost.

Internal Controls

• Require separation of duties in the business office. Someone not authorized to deposit or withdraw from the business should reconcile bank accounts.

• Require dual signatures on all business checks.

• An independent accountant should conduct a surprise audit on an annual basis.

• Have bank statements delivered directly to the owner/manager for review.

• All incoming checks should be stamped with "For Deposit Only" upon receipt.

• Never cash personal checks for customers or employees.

• Cash, checks and deposits should be kept in a locked safe, never a desk drawer.

• Reconcile cash drawers at the end of each employee's shift.

Proper employee selection and tough internal controls are your best defense against internal theft.