Soukup, Bush & Associates, P.C. Business Advisory Memo
To: Our business clients and associates
Date: November 2, 2008
Re: Bonding Employees
We are in tough economic times. Surely this comes as no surprise to you as a small business owner. As business owners, you need to be aware that with tough economic times, the propensity for fraud against your company by your employees rises. We have been informed of many business embezzlement and defalcation schemes in Northern Colorado in the past several months.
According to the 2008 Report to the Nation prepared by the Association of Certified Fraud Examiners (ACFE), U.S. organizations lose up to 7% of their annual revenues to fraud. To protect your business from employee theft, your business should develop and maintain internal control procedures that will help you detect and prevent fraudulent activities. Check tampering and fraudulent billing are the most common small business fraud schemes.
Even implementing strong internal control procedures does not guarantee that you will be free from fraud and embezzlement of your assets by your employees.
One protection which we strongly suggest for your business is to bond all your accounting and administrative personnel. Bonding is the process by which an employer can be indemnified for the loss of money or other property sustained through dishonest acts of a "bonded" employee. Bond protection can cover many types of acts including larceny, theft, forgery, willful misapplication, or other fraudulent or dishonest acts committed by an employee. There are different types of bonds that may be appropriate for your company. We encourage you to speak with your insurance agent to determine what type of bond coverage is right for you.
As a small business ourselves, we realize the emotional and financial investment you have in your business. You should take all reasonable means to protect yourself and your business. Obtaining a good bond policy on each of your employees is an excellent insurance to protect your business assets and livelihood. Please call us at your convenience if you would like more information regarding bonding or internal control activities.
SOUKUP, BUSH & ASSOCIATES, P.C.
