The security of your workplace, your property, and, to a lesser degree, the security of your employees' property are responsibilities you can't afford to overlook. The costs, both in dollars and peace of mind, can be staggering when you find that a crime has occurred. You should concern yourself with:

Burglary prevention. Protecting your office and equipment as well as your employees' property from vandals and thieves should be an important part of your safety program. There are a many ways to safeguard your business, including the use of locks, key control, lighting, and alarm systems.

Embezzlement prevention. Embezzlement has been defined as "the fraudulent appropriation of property by a person to whom it has been entrusted." It’s really a fancy name for employee theft. While there is no foolproof system of accounting or internal control that will absolutely prevent losses due to employee dishonesty, you can maintain an environment in which employee pilfering is discouraged. Take these steps to combat embezzlement:

• Recognize the warning signs. Here are some warning signs that embezzlement is taking place:
  • An increase in overall sales returns might represent a concealment of accounts receivable payments.
  • Unusual bad-debt write-offs could be covering up a fraudulent scheme; a decline or unusually small increase in cash or credit sales could mean that some sales are not being recorded.
  • Bounced business checks could indicate that funds are being siphoned out of your bank account.
  • Inventory shortages could indicate fictitious purchases, unrecorded sales, or employee pilferage.
  • Profit declines and increases in expenses could be a sign that cash is being siphoned off illegitimately.
  • Slow collections can be a device to mask embezzlement.
• Establish internal controls. An internal system of controls involves four steps:
  1. Screen applicants before they are hired.
  2. Periodically examine canceled checks to see if there is anything unusual.
  3. Take precautions in preparing payroll: have more than one person prepare it, have several different people prepare it, or oversee it yourself.
  4. Have two people sign off on checks, preferably in front of each other.
• Bonding. Bonding is the process by which an employer can be indemnified for the loss of money or other property sustained through dishonest acts of a "bonded" employee. Bonding can cover many types of acts including larceny, theft, embezzlement, forgery, misappropriation, and other fraudulent or dishonest acts committed by an employee, alone or in collusion with others.
  There are several types of fidelity bonds. Discuss each with your agent to determine whether damages from negligence are covered.
• Develop a security program. As part of your security program, you should write security rules and give them to your employees. You may want to include your security rules in your employee handbook, if you have one.
  What should you include in your policy? Security is a broad issue, and you may choose to keep the focus of your policy narrow, or you may choose to address many different aspects of security in your policy. Some topics that you might include are:
  • guards and security
  • your security program/committee
  • areas of limited access
  • restrictions on visitors
  • statements regarding the removal of company property
  • escort services to cars, if you provide it
• Developing emergency procedures. Post instructions in the work areas concerning what to do in case of a fire, earthquake, or other disaster, natural or otherwise, and make sure that your employees are familiar with those instructions.
  You may also consider having occasional building evacuation drills to make sure employees know what to do.

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