Fidelity and Crime: For reference to this section, see glossary.
(Y)es or (N)o
1. My business would be harmed if my safe was burglarized or I was robbed. Safe Burglary and Robbery
2. My business handles significant amounts of cash or negotiable securities. Money and Securities
3. I use a computer consultant who has access to my financial records, money and securities. Computer Consultants Fidelity
4. My employees have access to and responsibility for significant cash or property. Employee Dishonesty
5. I handle funds such as dues. grants, and contributions for non-profit groups. Non-Profit Bonds
Many who got caught with their hands in the corporate cookie jar did go to jail, and if those corporations had a crime insurance policy, then their insurer paid the losses caused by those crimes.
Employee theft is on the rise according to Hayes International, Inc., a national organization that studies theft in the workplace,
and to make sure your business accounts don't suffer losses due to employee theft, registered users of Big "I" Markets
(www.bigimarkets.com) now have access to a stand alone Fidelity & Crime market through Travelers.
Employee retail theft is estimated at more than $10 billion. The number of retail employees apprehended for theft in 2005 jumped 11% from the number apprehended in 2004; and retail theft is on the low end of industries that experience theft. "Theft Survey," Hayes International Theft Survey, Employee Theft (Nov. 27, 2007).
One out of every 27.9 employees was apprehended for theft from their employer in 2006. (Based on comparison data of over 1.85 million employees.) In 2006, survey participants apprehended 66,507 dishonest employees, an increase of 6.57% over 2005's apprehensions. Dollars recovered from dishonest employee apprehensions totaled over $56.6 million in 2006, a substantial increase of 16.44%
over 2005's recovery dollars ($48.6 million). The average dishonest employee case value in 2006 was $851.44, a 9.26% increase over 2005 ($779.27).
The industries that experience the lowest number of employee thefts are retail, sales and hospitality. This is most likely due to
high levels of accountability and security in these industries.
By contrast, the industries that have the greatest number of employee thefts are health care, information and technology, and
manufacturing. Maureen Milford, "Raiding the Supply Closet Hurts Companies' Pockets," The Journal News, Gannett News
Service (Apr. 2, 2007).
Commentary and Checklist
There is nothing petty about petty theft in an organization. Consider the account of a man who owned a nightclub for 14 years.
He knew that employees would occasionally help themselves to a free drink in the evenings, but he began to pay closer
attention when he noticed an employee on the cleanup crew leaving with a six-pack of beer each morning.
He now estimates his lost income at $2 million.
Here are some crafty methods that employees may use to steal: Forging Receipts. Salespersons can charge a customer one sum, ring up a receipt for less, and pocket the difference. Hiding Receipts. When accounting is sloppy and little supervision exists, employees can keep cash and receipts without raising
an eyebrow. Pocketing Loose Change. Small sums of money, such as fees or petty cash, may not be missed at all. Pilfering Merchandise. Goods your organization purchases may never even make it to the shelves. Fictitious Payroll. Occasionally, personnel managers will authorize salary for fictitious workers, then keep it for themselves. Overbilling Expenses. Managers with expense accounts may submit receipts twice and be reimbursed twice or inflate actual
expenses incurred. Purchasing Fraud. Employees sometimes declare themselves suppliers of nonexistent goods and, subsequently, reimburse
No matter how well conceived, internal loss controls frequently fall short of stopping a trusted employee from stealing. Fidelity
and crime coverage provides an important backstop to private companies against the actions of a thieving employee. To access the Fidelity & Crime product that fits your company needs, give us a call for a complete review.
Please review carefully!
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