As retailers continue to invest in new programs and technology to combat crime in their stores—such as inventory tracking and security systems—dollar losses from fraud and theft have reached an all-time high. According to the National Retail Security Survey, the majority of retail shrinkage in 2006 was due to employee theft at $19.5 billion, which represented almost half (47 percent) of all losses.

John Warren, general counsel of the Association of Certified Fraud Examiners based in Austin, Texas said no one knows the full ex-tent of the problem of employee theft.

“This is a crime of concealment, so we don’t have a good way to measure whether the level of theft is increasing or decreasing,” Warren said.

The key to stopping this kind of crime is prevention rather than detection.

“There should be a standard set of controls in every company and independent checks at every stage of a transaction,” Warren said. “If one employee writes the checks, another employee should sign checks. Or if one employee receives money, another employee should count the receipts and take them to the bank.”

It’s essential that companies promote “the perception of detection.”

“Employees need to know their employers are watching for fraud,” Warren said. “Companies should make it clear that they check transactions and conduct surprise audits. The more you put into employees’ minds that they’ll be caught if they steal, the less likely that these crimes will be committed.”

Warren encourages employers to offer a hotline or a confidential reporting service for employees. “This kind of system encour-ages people to report illegal behavior and prevents employees from attempting theft in the first place,” he said.