| If you follow current events, you know that no | | | | - Accepting kickbacks from suppliers and vendors. |
| business, no region is immune from the threat of | | | | - Taking out loans or credit lines for the business |
| embezzlement. It's an unfortunate reality that | | | | without anyone else knowing or authorizing the |
| employers need to vigilantly safeguard their | | | | loan. |
| assets from those they must trust the most: | | | | - Check kiting and lapping where employees take |
| their own employees. | | | | payments intended for the company and float or |
| Embezzlement often increases during difficult | | | | move money around from other payments and |
| economic times, which may explain increasing | | | | between accounts to cover the theft. |
| reports of employee fraud. Experts now indicate | | | | Spotting fraud is difficult, as evidenced by the |
| that employee fraud costs businesses about 7 | | | | fact that so much money is lost before |
| percent of their profits (Association of Certified | | | | embezzlement is identified. Still, there are many |
| Fraud Examiners). It causes a third of all business | | | | signs that indicate something is awry. Be especially |
| bankruptcies (U.S. Chamber of Commerce) and a | | | | watchful for these warning signs: |
| fifth of all business failures (American Management | | | | - A drop in profits without a drop in business. |
| Association). | | | | - A delay between receipt of payments and bank |
| ACFE research shows that the businesses most | | | | deposits. |
| commonly victimized include banking and financial | | | | - An employee's standard of living increases |
| services, insurance, government, health care and | | | | without a commensurate change in salary. |
| manufacturing, with small businesses being | | | | - Account receivables and payables don't balance. |
| especially vulnerable. In fact the median loss for | | | | - A large number of payments to the same |
| small businesses (fewer than 100 employees) was | | | | individuals or an increase in business with a |
| $200,000, with check tampering and fraudulent | | | | particular customer. |
| billing being the most common ploys. | | | | - Disorganized or missing financial documents |
| Interestingly, offenders are most often employed | | | | (especially around audit time). |
| in the accounting department or upper | | | | - Petty cash needs to be replenished more often |
| management and are first-time offenders. Some | | | | If you spot any of these warning signs or |
| of their more common tactics include: | | | | suspect through other means that an employee |
| - Stealing cash by taking money from tills and | | | | may be embezzling from your company, act |
| petty cash drawers, pocketing payments intended | | | | swiftly to address it. Pull together your trusted |
| for the business. | | | | business advisors, including an accountant and an |
| - Stealing supplies and property either for personal | | | | attorney experienced in spotting and dealing with |
| use or resale to others. | | | | fraud, to quickly investigate and act upon business |
| - Adding additional people, such as family | | | | theft. The longer it takes to uncover, the greater |
| members or friends, to the payroll. | | | | the potential loss. |
| - Submitting bogus reimbursement requests. | | | | |