Last year, 19% of small companies experienced employee fraud, up 2 percentage points from 1995. The latest annual small-biz study from Arthur Andersen & Co. and National Small Business United says only 17% of companies with fewer than 20 workers faced this problem. But companies with 20 to 99 employees (35%) got ripped off almost as much as companies of 100 to 500 (39%). The average amount taken was $9,800, although most companies lost less than $5,000. The good news is, internal controls revealed the problem in 61% of the cases. Just 5% were clued in by honest employees, while 12% found out by accident and 9% through anonymous tips.

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