Jun 29, 2015 · Identifying embezzlement pressures can help the investigator assess the likelihood that embezzlement is occurring and focus on individuals who might have pressures and motives to embezzle. In most small companies, fraud and, in particular, embezzlement can be prevented to a great extent when owners are committed to the internal control process.
Embezzlement is a form of fraud , this is the illegal appropriation of property , by a person entrusted with its possession . This can be prevented when more than one person should receive payments , issue receipts for payments , audit the account and deposit the money .
Zayne Miller Chapter 2 The Legal System Short Answer: 1. How can embezzlement be prevented? To better control/prevent the act of embezzlement more then one person should receive payments, issue receipts for payments, audit accounts, and deposit the money. Page 39 2. What is the difference between libel and slander?
If an employee is having financial problems or if co-workers are sensing suspicious activity you do no want to be the last to know. Act upon information with sensitivity and with confidentiality, and try to separate gossip and bickering from facts which could alert you to problems in the workplace.
Tell them about any insurance coverage so that policy conditions are complied with. Embezzlement is often deeper and more widespread than is first apparent. Careful marshalling of the facts is important before taking the next step. Mistaken or unprovable accusations can destroy employee morale and can lead to lawsuits.
If you have internal bookkeeping, also retain a CPA who will look at the books regularly, not just for tax purposes but also for accuracy and consistency. Too many CPAs simply prepare year-end tax returns based on numbers given by bookkeeping. Ask your CPA about embezzlement prevention.
Mistaken or unprovable accusations can destroy employee morale and can lead to lawsuits. At the same time, employers are often paralyzed with uncertainty as to how to proceed. In fact, career embezzlers count on this to make their exit and avoid consequences.
In the of 485 cases of major embezzlement studied in 2010, the average embezzler stole — ready? — $17,656 per month from their employer.
An ounce of prevention is still worth a pound of cure. Start with a thorough audit of your own. Look at the policies and procedures you have in your accounting department. Find the concentrations of power and break them up. Then turn to your bank and make use of as many of their cash management services as you can.
The bad news is there’s not much you can do about the major causes of fraud: Debt, divorce, drugs and simple disgruntlement are the “ 4 D’s” that push employees toward embezzlement and theft. Even if you know about employees facing these pressures, you can’t watch them every minute of the day.
By putting the bank’s address on your invoices, you can have customers send payments directly to the bank. Deposits are made more quickly and accurately. Nobody has to leave their desk to take checks to the bank. And there is much less opportunity for an employee to steal or misappropriate a customer’s payment.
If your receptionist opens the mail, writes checks to pay the bills, and mails the checks… you’ve got a problem. Divide each side of the accounting duties (paying bills and issuing invoices) between at least two people. The person who enters the bills, should not write the checks.
The person who enters the bills, should not write the checks. Likewise, the invoice entry and deposits should go to two different people. In addition to reducing the opportunity for an individual to defraud you, this “check-and-balance” system will greatly reduce mistakes and oversights. Look at the Bank Statements.
David Worrell is a serial entrepreneur, consulting CFO, and financial analyst. His new book, Entrepreneur's Guide to Financial Statements, has been called "mandatory reading for small business owners.". David's tips and tricks for running a more profitable small business can be found here and on his business blog, www.FuseFinancialPartners.com.
Run all receipts and disbursements through a checking account. Put any money that comes into the business into a checking account. Take any money that leaves the businesses out of a checking account. This provides a record of receipts and disbursements that cannot be tampered with because it’s controlled by the bank.
If we’ve heard it once, we’ve heard it a thousand times: “I trust my bookkeeper.” Almost every case of embezzlement in small businesses involves a person who is trusted, taking money from an unsuspecting business owner.
We advise that the same employee not set up a vendor, approve a payment and write the check. It’s better to have two people involved when money leaves the business. In the same way, one employee should not set up an employee on the payroll system and cause a paycheck to be cut.
Employee theft and embezzlement can happen in any business. However, it hits smaller businesses in larger numbers, in part because too often owners don’t have the right checks and balances in place. The following are five tips that can help you greatly reduce the chance that you are victimized. 1. Know that it can happen to you.