Pub. 2 2020 Issue 2

M A R C H / A P R I L 2 0 2 0 16 nebraska cpas UNDERSTANDING AND PREVENTING EMPLOYEE THEFT Employee theft in the workplace is a serious problem for employers: 75% of employees have stolen from their employer at least once, and businesses lose 5% of their annual revenue to employee fraud, theft, and abuse. Employee theft is a crime that is costingU.S. businesses $50 billion annually, but evenmore shocking is that employers think they are immune from such a crime. Employees at various levels can steal almost anything they want. Examples include: • Time theft — spending hours each day writing personal emails, surfing the Internet, and having coworkers clock in or out for them • Skimming—pocketing cashwithout recording the transaction • Swapping checks for cash — keeping cash and replacing it with a check that is not deposited • Lapping — theft of cash or checks by crediting one company’s accounts receivable account through the abstraction of money from another customer’s accounts receivable account • Kiting — building up balances in two or more bank accounts based upon floating checks drawn against the other accounts • Stealing of inventory • Theft of intellectual property How Employees Steal Regardless of the industry or type of business, three factors are always present for employee theft to occur: pressure, opportunity, and rationalization. The greedy employee will first steal when their income can no longer support their desired lifestyle (pressure). This employee justifies stealing small quantities before becoming bold and then justifies the theft of larger quantities by believing it BY RALPH J. EVANGELISTA, CPA, FRAZIER, EVANGELISTA & COMPANY, LLC, CPAS AND SEAN BROPHY , DELOITTE