CPA Steve Sorensen: Embezzlement vs. Larceny vs. Skimming

As if business owners didn’t have enough problems to worry about, with stiff competition and rising commodity prices keeping them awake at night; they should now keep watch of their employees. While embezzlement is considered stealing, it is much more, which will be explained by CPA Steve Sorensen. Embezzlement differs from larceny and skimming, though they may all have similarities. 


As mentioned, there’s more to embezzlement than just theft. It is also the abuse of the position of trust given to an employee by his or her employer. This also usually means the employee has legal access to the company’s pockets. Common examples of embezzlers are cashiers, tellers, accountants, bookkeepers, and sales staff — notice that these are employees who have finance-related job functions.

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The primary difference between larceny and embezzlement is that the person who did the crime is not in a position of trust nor does he/she have legal access to the company’s money. Take for instance, a dishwasher who works in a fast food chain who steals $100 from the cash register. As his/her work duties are not related to handling of money, when caught, he/she will be charged with larceny, rather than embezzlement.


Meanwhile, skimming differs from larceny and embezzlement in that these are “off-the-books” crimes. This means the employee, regardless of whether he/she is in a position of trust or has legal access and control over the finances, steals money before it can be recorded in the company’s books. In the previous examples, the money stolen was already accounted for in the books or placed in the cash register.

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 What to Do

No business owner goes into business thinking he/she will be a victim of employee theft. However, as news reports continue to show, it’s always better to be safe than sorry, especially if it means saving hundreds of thousands to millions of dollars. Business owners who discover any embezzlement operation should contact law enforcement. Contacting the bank is also advised by CPA Steve Sorensen, as embezzlement commonly involves fraudulent checks and credit cards.

Business owners may also want to keep track of all their passwords and make back-up files as these will be needed for investigation and forensic accounting purposes. Suspicions of or discovering embezzlement can be a confusing, overwhelming event particularly when it’s committed by a trusted employee but an investigation is always warranted, if only to stop the employee from damaging the organization further.

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