In part one of this post, I discussed the dangers of the trusted assistant.  I said that, although the trusted assistant is the person that every CEO needs (the right hand that ensures that everything works smoothly), in some cases that same assistant can go afoul and take advantage of the trust placed in him or her by the CEO.  Family pressures, such as divorce, custody battles, and other changes in lifestyle, can create a force that causes our valuable and trusted assistant to commit fraud.

In this part two, I want to offer some prevention steps that can be implemented to help reduce the possibility of theft by someone in a position of trust.  Some of these prevention steps are standard measures that all companies can and should have in place, though are not used many times and create an environment where theft is just too tempting. Implementing some of the items listed below will help mitigate the risk of fraud.

1. Segregation of duties: This is a basic level-one prevention method.  Separate the receiving, issuing, and collection of payments to prevent fraudulent payment requests.

2. Purchases made by a separate party: If the assistant has been told to buy something, a third party should receive the approved request with the manager’s approval and make the purchase.

3. Background checks: These should be a policy that all companies have in place.  Prior to each hiring decision, a background check should be run on the candidate.  Background checks can bring to light serious infractions that may help cull out a potential problem employee.  One mistake does not make a person a criminal, but several tell a story.  Why put the company at risk?

4. Review accounting records: CEOs or CFOs should review accounting records related to purchases by the assistant.  Many times it is just assumed that everything is ok for the assistant.  No one stops to ask if the assistant should be buying or ordering certain items.  Management review is crucial.

5. CEO sign off on expense reports: Each person making purchases should be required to fill out an expense report and submit it to management for sign off.

6. Donation regulation: Donation recepiants should be in a database and compared to staff records to make sure donations are not going to an employee’s relative unknowingly.

7. Time sheet review: Someone should review the assistant’s payroll records on a routine basis.  Do not exempt the assistant from this review just because he or she has access to the boss.

Some of the steps listed above may seem simplistic or, in some cases, heavy handed; however, the bottom line is that prevention often keeps fraud from occurring or at least from getting out of control.  Your staff needs to know that there are controls in place and that reviews will occur.  No company can completely prevent theft from occurring, but a reasonable set of controls will provide an environment that does not allow for fraud to be committed easily.  Certifed Fraud Examiners can implement controls to support crime prevention in the workplace.  CFEs understand the overall basics of fraud prevention and can help your company prevent the trusted assistant from taking that first step down the wrong path.

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