In this continuation of Thursday's blog post on detecting and preventing embezzlement, attorney Randall Crane provides six steps employers should take to ensure they don't become victims.

Step 1: Hire with care

For individuals who will have access to funds, scan the resume to look for previous jobs with companies that seem to have had financial trouble. Be suspicious. Check references.

Question prospective hires in detail on why they left previous employment. This is a good idea in any case just to try to detect toxic and unqualified employees before they can damage the business. Of course perform a background check looking for felony convictions or other information pointing to criminal activity as permitted by the state in which the business is located.

Step 2: Separate accounting duties

Do not let the same person control both who pays and who gets paid. Speeding up or not reporting collections and slowing payments is a classic way to cover up an embezzlement.

If you have internal bookkeeping, also retain a CPA who will look at the books regularly, not just for tax purposes but also for accuracy and consistency. Too many CPAs simply prepare year-end tax returns based on numbers given by bookkeeping. Ask your CPA about embezzlement prevention.

 Step 3: Keep communication open

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If an employee is having financial problems or if co-workers are sensing suspicious activity you do no want to be the last to know. Act upon information with sensitivity and with confidentiality, and try to separate gossip and bickering from facts which could alert you to problems in the workplace.

An employee’s right to privacy in the workplace exists but is very limited. A notice to employees given at time of hire and in the job manual that computers, correspondence, email, and telephone, and contents of desk drawers are not private and are subject to inspection without notice will not concern most employees but will help to deter that employee who is in a desperate financial situation and is thinking of embezzlement to bridge the gap.

Step 4: Consult with your insurance agent

Determine what coverage you may or may not want to have. Surprisingly some business policies cover embezzlement losses automatically, others offer coverage for very little additional premium.

Step 5: Be discreet

If there is evidence of embezzlement, do not confront the embezzler, speak to co-workers or immediately go to the police. Contact an employment attorney and your CPA to determine how to proceed. Tell them about any insurance coverage so that policy conditions are complied with.

Embezzlement is often deeper and more widespread than is first apparent. Careful marshalling of the facts is important before taking the next step. Mistaken or unprovable accusations can destroy employee morale and can lead to lawsuits.

At the same time, employers are often paralyzed with uncertainty as to how to proceed. In fact, career embezzlers count on this to make their exit and avoid consequences. As with any business crisis, outside professionals who can offer assistance and perspective are well worth their fee.

Step 6: Don’t be naive

Be aware that human weakness is everywhere, even among trusted employees and partners. Do not become cynical or unduly suspicious, but do be vigilant, pro-active, and aware that exposure to business loss comes from inside as well as outside the company.