Don't get scammed! How to prevent in-house fraud and theft.

U.S. businesses annually lose an average of 6% of revenues to employee fraud and theft, and smaller businesses are even more vulnerable.

Recent examples: A Pennsylvania health care exec set up a series of shell companies to invoice his hospital. For 12 years, he pocketed the checks, stealing $1.7 million. And the comptroller of a Florida nonprofit skimmed more than $1 million in withholding from employees' paychecks, leaving the organization's budget in tatters.

Most common cons

More than two-thirds of all occupational fraud involves some form of fraudulent disbursement of funds. Beware these top schemes:

* Billing schemes in which an employee submits invoices for fake goods (pocketing the check) or to pay for personal items.

* Payroll fraud involving bogus claims for additional hours, or manipulation of an employee's rate of pay.

* Expense reimbursement scams that rely on fake or inflated business expenses.

* Check tampering in which an employee forges, alters or steals a company check.

* Register schemes in which retail workers make false entries on a cash register to conceal stealing cash.

5 preventive measures

1. Spread responsibility for major accounting and financial transactions so no single employee controls them.

2. Have supervisors approve invoices and expense reimbursement requests before they are forwarded to accounting. Bosses should sign off on time sheets, too, especially those showing overtime hours.

3. Catalog all processes with a potential for being manipulated, including accounts payable and receivable...