This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

How to Prevent Rogue Employees

Stocks in this article: USB

VIENNA, Va. ( MainStreet) -- Small-business owners have enough to worry about. The last thing they need to deal with is an employee gone rogue.

Unfortunately, these things do happen, and not just to large companies such as UBS (UBS), where 31-year-old equities trader Kweku Adoboli made a series of trades in September that cost the investment house roughly $2 billion.

Business worldwide lose 5% of annual revenue to fraud, a study says -- and small businesses are particularly at risk.

Small businesses are particularly vulnerable, experts say, because they typically lack anti-fraud controls for even the most common schemes -- check tampering and fraudulent billing.

Today's economy makes matters even worse. Theft or fraud by an employee could hit a small company when it is already struggling to stay afloat -- potentially knocking it out of business altogether.

According to a report last year by the Association of Certified Fraud Examiners, organizations worldwide lose 5% of annual revenue to fraud. Based on the 2009 gross world product, fraud losses totaled $2.9 trillion, with the median loss in an occupational fraud case hitting $160,000 and nearly 25% of fraud cases involving losses of at least $1 million.

BookKeeping Express provides virtual professional bookkeeping services for small businesses, advertising a benefit of being an outsourced service: The company's certified bookkeepers pick up on employee theft and can be helpful in the case of "discovery and recuperation."

CEO Greg Jones answered a few questions for us about how small businesses can protect themselves from rogue employees.

Why are small businesses so vulnerable?

Jones: In some cases it starts with the hiring phase, where the business owner maybe has not in his or her past had to do much hiring and doesn't have a formal process in place to bring people on board. Many people are wearing many hats due to the company's size. People are focused on day-to-day chores and nobody's structuring process and procedure, HR policies and things that keep people in line. If you don't have that, what typically happens is everybody is running around doing things the way they feel is the best way to do things, and that may not be the best way.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs