How to Prevent Misappropriation of Funds

Misappropriation of funds is a severe problem that could arise if staffing employers do not screen employees properly. Many liabilities affect the staffing and recruitment industry. Professionals in this field must abide by equal employment standards, for example, and protect employees’ rights. In addition to these potential pitfalls, staffing agencies must be diligent in preventing the misappropriation of funds. Unfortunately, this can happen when a dishonest employee gains access to the company’s resources. Misappropriated funds can then become an issue of fiduciary liability.

Prevent Misappropriation of Funds With These Steps

staffing fiduciary liability policy can minimize the damages that this risk incurs, and agencies should follow these four tips to ensure they responsibly handle funds.

Reduce Staffing Fiduciary Liability

A company is a fiduciary if it handles a client, stakeholder, or employee’s funds. Fiduciary liability refers to the risk that emerges when a company mishandles these funds. Reducing fiduciary liability is thus an integral part of preventing the misappropriation of funds. There are several strategies that companies can use to achieve this. For example, a business may outsource its fiduciary management tasks to another company to avoid any direct responsibility or potential misappropriation. Similarly, creating an investment policy statement (IPS) can establish accountability, making potential red flags easy to spot.

Limit Employees’ Access to Funds

Businesses should also protect privileged funds by limiting access to the accounts. If any employee can transfer funds or make withdrawals, the likelihood of misappropriation increases dramatically. Money not in a bank account may also be vulnerable to misappropriation. If a business keeps cash in a register or a safe, it must have a lock or access code to secure it. Security features that track the history of employee access can further protect funds from misappropriation.

Maintain Stringent Supervision

Sometimes an employee will misappropriate funds and hide in plain sight. Usually, though, employees attempt to conceal their actions for as long as possible. Most will do this by waiting until no one is supervising them to misbehave. To this end, employers must maintain stringent supervision to prevent such infractions. It may include adding security cameras or computer surveillance software to monitor employees’ actions when a supervisor is not immediately present.

Get Staffing Fiduciary Liability Insurance

Staffing fiduciary liability insurance is a wise investment for any business that deals with money — and that’s every business. Staffing companies that must handle funds from clients and other stakeholders are thus especially vulnerable to accusations of misappropriations. These businesses need protection from the litigation and damages that this allegation could incur. In addition to staffing fiduciary liability coverage, companies can minimize risk by proactively implementing a prevention plan for the potential misappropriation of funds.

About World Wide Specialty Programs

For the last 50 years, World Wide Specialty Programs has dedicated itself to providing the optimal products and solutions for the staffing industry. As the only insurance firm to be an ASA commercial liability partner, we are committed to that partnership and committed to using our knowledge of the industry to provide staffing firms with the best possible coverage. For more information about Staffing Professional Liability Insurance or any other coverage, we have available to protect your staffing business, give us a call at (877) 256-0468 to speak with one of our representatives.