This Podcast Is Episode Number 418, And It's About Steps Construction Company Owners Can Take To Avoid Employee Fraud Billing schemes. Skimming. Check-tampering. Employee fraud is a real risk for businesses with fewer than 100 employees. In fact, according to the , small businesses lose almost twice as much per scheme to occupational fraud. If you Google Search "Construction Bookkeeper Embezzlement," you will see thousands of hits, and most of the problems construction companies suffered could have been avoided if the owner had known about and followed a few simple guidelines. Unfortunately, until a contractor has gotten to know us, they tend to think of us as just another contractor's bookkeeping service. This means some contractors think we are crazy to suggest that any trusted employee, especially an in-house bookkeeper, would steal money from their company, and so they ignore us until it was too late. Be aware of the "Employee Theft 10-10-80" Rule Discovered over many years of experience and first-hand observation by auditors, accountants, fraud examiners, anyone involved in detecting employee theft. Ten Percent - Of all employees, including bookkeepers, will steal in a variety of ways from office supplies, petty cash, graft, kickbacks, and payoffs from your suppliers, vendors and sub-contractors and even hundreds of thousands or even millions of dollars. They will do it regardless of how many security systems are in place because they lack integrity and have a "taker's" entitlement paradigm that states: "It Is Better To Take Than To Make." They cannot be stopped, only caught! And only then if you have systems in place and if you can convince the criminal justice system to take action, good luck with that! Ten Percent - Of all employees, including bookkeepers, will never steal because they have integrity and a "Producer's" paradigm that states: "It Is Better To Make Than To Take." In the end, these are the people who will add so much value to your company you cannot help but reward them with more money, benefits, and recognition. Because if you do not, they will be recruited by your competitors.  Eighty Percent - Of all employees, including bookkeepers, will steal if they feel confident they can get away with it and if circumstances allow for it due to weak integrity and a sense of "Redistributing The Wealth, But Not The Work Or The Responsibility." Recognize the most common signs of fraudulent activity before an unscrupulous employee destroys your construction business: Identify high-risk employees When an employee has something to hide, their behavior may become suspicious; they may act closed off, secretive and defensive. A typical clue is a worker who won't take time off for a holiday (because someone may take over their duties and discover the fraud). Others will try to cover up their improved financial status - a new car or home, for instance - with tales of a lottery win or inheritance. In addition to employees acting suspiciously, high-risk employees might also include those: struggling with debt dealing with mounting bills because of unfortunate circumstances (e.g., divorce, a family member's poor health) with a history of drug abuse  involved in risky financial ventures (e.g., gambling, investments)  If an employee has a motive for fraudulent activity at work, think of the following behaviors as red flags. Access and opportunity Unsurprisingly, the highest risk employees for fraud have trusted roles in financial services: Accounts Payable, Accounts Receivable, accounting, and bookkeeping. To commit fraud, or in this case, embezzlement, an employee must have both access and opportunity - that is, access to funds, banking records, and accounting data. The ideal situation is someone entrusted with performing multiple roles; that is, they can both cut and sign checks, process AP, and handle bank reconciliations. Unmanaged Control Access is just one part of the equation when...