Embezzlement by trusted employees can be difficult to detect, but signs include inaccurate books, unbalanced accounts, and lifestyle changes. It can involve theft of cash, supplies, or misuse of a company credit card. Preventative measures include surprise audits and mixing up projects.
It can often be difficult to recognize that embezzlement is occurring, as employee theft is often carried out by an organization’s most trusted people. The embezzler may arrive at work early and stay late, exhibiting the same types of behavior that any model employee would. Some signs of embezzlement are inaccurate or suspicious books, improperly balanced accounts, and excessive losses or spreads. An embezzler can often be recognized by their erratic behavior or lifestyle changes, as many people find it difficult to deal with the guilt of stealing from an employer.
Embezzlement doesn’t necessarily involve the outright theft of cash, although it sometimes does. Common forms of employee theft include the misappropriation of business or office supplies, or the inappropriate marking of good stock as scrap or recall. Misuse of a company credit card is another common form of embezzlement, especially if no one keeps track of the charges. You can also use double billing and other accounting tricks. Embezzlement is limited only by the creativity of the thief, and new ways are always being devised to rob an employer.
It can take a keen eye and the ability to emotionally step away from the situation to determine that someone you trust is stealing from your business. Embezzlers are often very trusted in the company or organization, which gives them access to money while also keeping them off suspicion. However, many embezzlers are first-time thieves, so they often make mistakes or behave erratically. If an employee suddenly insists on taking work home or has made abrupt lifestyle changes, something may be wrong. Many embezzlers spend the money instead of saving it, so sudden and unexplained purchases can indicate that embezzlement is taking place.
Most companies accept a certain amount of shrinkage, although excessive levels or sudden changes often indicate that an employee may be stealing. If you experience a sudden increase in shrinkage or an unexplained shortage of inventory, you may want to do spot checks or have someone else double-check the work of any employees who may be responsible. This can also apply to improperly balanced ledgers, poorly organized financial statements, or payments that appear to be duplicates. Accusing someone of embezzlement without evidence can be disastrous, so signs like these should typically be looked into with care.
There are also a variety of ways to stop or prevent embezzlement, whether or not you suspect it is happening. Mixing up rosters or projects can dissuade a thief from taking action, as he will know that someone might learn of his plan. Surprise audits can also be effective in both uncovering the theft and preventing future embezzlement. If a potential thief knows that his work could be verified at any time, he may not go through with his embezzlement plans.
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