How To Identify Embezzlement

Embezzlement is a common crime that puts many businesses in horrible situations. Reports show that businesses lose more than $400 billion each year because of embezzlement, so you must watch out for the signs to protect your business. The following are some warning signs of embezzlement and what you can do about them. 

Missing Company Funds

One of the top signs someone may be embezzling from your company is missing funds. The funds could be missing from a special company account or a specific department. 

Unauthorized Charges

You might notice that a certain employee is making unauthorized charges with the company’s credit card or credit account. Upon more extensive investigation, you may find that this money goes to the employee’s personal expenses. This action is one of the most common types of embezzlement in the workforce today. 

Lifestyle Changes

A lifestyle change such as a divorce, medical issue, gambling problem, or financial crisis should raise a flag. However, the existence of one of those situations by itself does not mean the persons involved will embezzle from your company. Keep an eye out for such individuals, but do not accuse anyone of harming or trying to harm your company without solid proof.  

Payments Going Into Fake Accounts

One sign that someone is embezzling your company is the existence of fake accounts attached to your employee’s home address. This person might be sending company funds to set-part bank accounts. 

Unbalanced Accounts or Manipulated Checks

Another tell-tale sign that embezzlement might be going on is if you notice unbalanced accounts, checks that look manipulated, or a general sense of disorganization. Embezzlers sometimes keep things very disorganized and hide their wrongdoings in the chaos. 

How To Prevent Embezzlement

You can take a couple of precautions to lower your chances of becoming an embezzling victim. These are a few ideas:

Perform criminal checks

Performing criminal background checks is a wise practice, but it isn’t perfect. Many first-time embezzlers have clean records, and many reformed ex-offenders don’t steal from their employers. Therefore, your guidelines should be cautious but not completely unforgiving. Look at each person’s criminal history and conviction dates before deciding. 

Show employee appreciation

Many embezzlers take money from their employers because of a perceived wrong. Perhaps some of them feel underappreciated or robbed of something they thought they should have had.

Their remedy is to provide themselves with it using illegal tactics. Paying more attention to employees and showing them appreciation can be a great incident prevention strategy. Sometimes, a simple "thank you" or a benefit such as a bonus or personal day is enough to appease workers.   

Perform audits

Ensure that someone performs audits of regular paperwork and financial documents. With regular audits, you will catch your discrepancies faster and have the opportunity to correct them before your business experiences a massive loss. 

Now you know a little bit about how to identify embezzlement in your business. Do not hesitate to take legal action against someone you believe is embezzling your company.