Warning Signs of Embezzlement

Embezzlement is one of those things everyone knows about and fears, but assumes it’s not happening to them or their business. However, this type of fraud is one of the most common and it’s estimated by the National White Collar Crime Center to be as much as a 3.7 trillion dollar loss in the United States alone. It happens more than you might think.

Many business owners have a gut feeling the business is a victim of embezzlement before they have concrete evidence it’s happening. If you think your business is at risk, think through your daily financial functions to determine if any of the following signs apply:

• Disorganized records, accounts, and filing systems - especially if this appears to be on purpose

• Unexplained or unusual drops in profit margins

• Unauthorized or unusual changes to accounting records and practices, especially at the hands of one individual

• An extremely dedicated employee (or so it seems) that refuses help, to take vacations, works late, and is secretive or protective of their work

• Any duplicate bill payments or unusual line items in your expense reports

• Any duplications in vendor’s addresses that happen to coincide with the employee’s address

• Delays in bill pays, bank deposits, or any other financial transaction that should be handled in a timely manner

• Failure to segregate cash duties, leaving it all up to one person

• Documents or other important records go missing

• Hesitation or secrecy when others ask about certain accounts and/or financial records

• Accounts receivable and payables simply don’t balance for unexplained reasons

• Petty cash has a tendency to be low or go missing

• Products have a tendency to be missing for unexplained reasons

• One individual or vendor has been paid an unnecessary or suspicious amount or one vendor or person has numerous outstanding credits

• An employee’s standard of living has dramatically increased with no logical explanation

• Lack of set controls to limit embezzlement opportunity

• Increases in past due accounts receivable

• Weird or unexplained alterations in records, checks, bills, or any other financial transaction that doesn’t make sense

• A simple gut feeling of something is amiss

If you suspect your company is at risk of fraud at the hands of an employee, partner, or associate, contact Tally Services, Inc. in Fort Collins. We can provide a second set of independent eyes to ensure your finances line up as they should. We will be able to spot any inconsistencies and find fraud if it’s happening. Our team of accounting experts will also help set systems in place that will prevent it from happening. Contact us today for more information.