Trudy is a certified public accountant and the chief financial officer of a privately owned real estate developer. She was relating her frustration with the company owners and their unwillingness to implement financial controls. For example, she recently had complete control over a large unrestricted account. She could have wire transferred it to her personal account at any time. She was very uncomfortable with the situation.

Employee dishonesty is a delicate subject. Owners want to trust employees.

Unfortunately, denial is not protection against dishonesty. Ask your accountant to list the ways to steal. You will be astounded at the length of the list. You also may be astounded to learn who enables most thefts to occur. It is the owner. Only the owner can make it easy to steal. Only the owner can refuse to remove temptation. Only the owner can lead employees to believe they won’t miss the cash. Only the owner sets the level of honesty to be observed in the business.

There are three conditions present when fraud takes place: motive, opportunity and rationalization. Only the first is the responsibility of the employee. Financial difficulties can arise at any time: illness, addiction, loss of income, increased expenses, the list goes on. The owner often will be unaware when an employee has a triggering motive. Employees can be unwaveringly honest for years and be placed in a stressful situation by an overnight event.

Here is where opportunity and rationalization come in. Owners provide opportunity by ignoring good financial practices. Turning complete financial responsibility over to one person, as in the case of Trudy, can prove an irresistible opportunity for the financially stressed employee. The complete list of best financial practices is beyond the scope of this column. However, you can begin by separating duties. Don’t allow one employee to perform all the financial duties. For example, split the handling of receipts and expense payments between at least two employees, if possible. Don’t allow the person handling the checkbook to also reconcile the bank account. Require two signatures on any large payments. If your business has too few employees to divide the duties in this manner, assume some of the duties yourself.

You can reduce the third condition of rationalization by letting your employees know you are involved in the control of business money. Run and review reports yourself. Change the schedule for running the reports. Install a petty-cash system. Be scrupulous in your personal handling of business cash. Employees observing you taking $20 from the till can easily rationalize that you won’t miss any money they may take.

Your financial statements can be an early-warning system for fraud detection. Regularly prepare trend reports and look for anomalies.

I don’t enjoy writing about employee dishonesty. However, it is an unpleasant fact, and you can do something about it. Do your part to reduce opportunity and rationalization and employee temptation will be reduced.

Bowser@BusinessValueInsights.com. Dan Bowser is president of Value Insights, Inc. of Durango, Chandler, Ariz. and Summerville, Pa.