Even farm businesses can be victimized by financial hanky panky. One farmer told me one of his trusted long time employees embezzled over $15,000 from the business checking account. They also found out she had taken a credit card out in the farmer's name and created quite a balance.

While it's impossible to guarantee this never happens on your farm, you can take some steps to minimize the chances.

First, we do not recommend a non-family member be responsible for signing checks without supervision. We realize it takes time to prepare checks so we recommend the clerk prepare the checks and a family member then review the vendor documentation before signing the check.

Never use a signature stamp to sign checks! It's too easy for a third party to get access to the stamp.

Second, we recommend that a family member actually receive the mail at their home and open all mail prior to giving the mail to a clerk. It's also not a bad idea to have a family member actually create the bank deposit ticket and then have the employee post the deposit in the farm records. We do not recommend allowing a non-family member to actually take the deposit to the bank.

Third, check your credit report on a regular basis. Since employees often have access to sensitive personal information it is possible that they could get a credit card issued in your name and then change the mailing address to another address. Consumers are entitled to one free credit report each twelve months from each of the three major credit-reporting firms.

Most credit is held jointly between husbands and wives. Since the personal financial information is actually reported to all three agencies it is possible to get a credit report every two months by requesting a credit report from one agency on the husband, then waiting another two months to request a report on your wife. You can receive your free credit report by going on-line to www.annualcreditreport.com, the government-approved site for free annual credit reports.

Finally, have an annual "Audit Day" in your office. You or your accountant could compare the checks written from your bank statement with the original bills for accuracy. Pay particular attention to checks written to vendors such as credit cards, utilities, and telephone companies since it may be possible for an employee to pay their own personal bills with your business check.

You may also want to request a print out of checks that you have received from where you sell your grain and livestock and make sure all the checks they issued actually were deposited in your bank.

The very act of performing a regular audit helps to keep an employee honest.

-Darrell L. Dunteman is an agricultural financial consultant and Management Coach at Farm Futures. E-mail Dunteman directly at [email protected].