Partner Corner: Tips to Avoid Employee Theft

By: Michelle Evans

A primer on protecting your association.

Challenge: Despite signs of a rebounding economy, instances of employee theft continue to harm associations. How can I protect my organization?

Solution: Here is a real-life insurance claim example and some helpful tips for your organization to combat employee theft:

An association discovered several check copies missing during a review of its bank statements. The association secured the missing checks from the bank and found they were made payable to an accounts-payable employee. This employee did not have check-signing authorization, and the signatures were forgeries. The association closely examined all of its bank accounts and determined that the employee was forging checks from three of its five accounts—a total of 159 checks totaling more than $373,000 over two years.

Mitigation Techniques

Have a senior-level committee review audited financial statements with an independent auditor. An annual audit conducted by an outside audit firm familiar with the association industry will help uncover potential financial improprieties. This will also ensure that all questions from senior staff and the board of directors get proper attention with respect to your organization's financial viability, overall association management, and strategic direction.

For additional protection, take these steps:

  • Split duties that, in combination, could facilitate fraud.
  • Never leave blank checks unsecured.
  • Avoid using signature stamps.
  • Use lockboxes for deposit of incoming checks.
  • Consider eliminating organizationwide credit cards.
  • Always verify references and professional credentials.
  • Conduct background checks.

Prevention is imperative, as questions regarding an association's financial solvency can have a far-reaching negative impact on its reputation and ability to retain and increase membership.

Michelle Evans is assistant vice president of Aon Association Services, a division of Affinity Insurance Services, Inc., which provides the ASAE-endorsed Association Office Package Insurance (business insurance) program to associations. Email: [email protected]