Tips To Prevent Fraud and Employee Theft in Real Estate Business

Nearly all businesses can be quite profitable in a perfect world but the problem is that the perfect world doesn’t exist. There are many factors due to which the profitability of a business can go down drastically. Among several factors, fraud or employee theft is the most common one. Things can be pretty worse if the person embezzling your funds manages your accounts or even provides little help in that area.

 

Will Yakowizc described a study in which he told how badly the embezzlement by employees has been hurting the businesses. The results are shown as:

 

“Smaller businesses are more at risk to employee theft. The report finds that 55 percent of embezzlement cases occurred at businesses with 100 employees or less, with an average loss of $1.3 million.”

 

So, it is worth mentioning here that accounting holds critical value if you have stepped into a business and you want to make a good start. Sadly, it is overlooked most of the times.

 

Now, there are three things that have to be taken into consideration if you want to assess the likelihood of frauds by employees. These are basically the major reasons one could commit fraud.

 

•Pressure: Pressure refers to the financial status of the person in question, i.e. if he/she is committing due to financial difficulty.

•Rationalization: Sometimes, a person may rationalize a crime before doing it. For instance, an employee may make his/her mind by thinking about the bad behavior of the boss.

•Opportunity: Sometimes, committing a crime may be too much of an easy task for the employee.

 

It simply means that you will have to focus on these three factors if you want to reduce the chances of fraud by your employee.

 

A few steps that you can do to reduce the likelihood of fraud are worth mentioning here.

 

Separation of duties

Do you have the same person dealing with the accounts receivable and accounts payable? Asking a person to multitask can increase the likelihood of embezzlement. Apart from the fact that he/she would find it difficult to perform two tasks simultaneously, there is a mighty chance for the person to find workload as a justification for fraud.

 

Access control

You have to make sure that it’s only you who has the full access to everything related to accounts. While you can share the authority of some portions to the people who are going to need that authority, you have to make sure that you have the capability to run check at any time. You need to have every password and your important paperwork needs to be locked in a safe.

 

Physical audits

Physical audit is quite necessary to make sure that everything in your system is actually at the place where it belongs. Moreover, you will have to make sure that you do not have much of the loose cash hanging around. This is where physical audit can be quite helpful.

 

Conclusion

There are several other things that you can do to restrict the likelihood of fraud but you might not be able to implement each of those while your business is in the initial phase. Still, you can work on pretty basic things to ensure that everything goes smooth. Remember, you will need to think about the wellbeing of your employees as well as you will have to keep a good check on things.

 

Done