It’s happened one too many times before – trusted employees who later turn on their employers and steal. But why? Why is it employees who are least expected to embezzle turn out to be the ones who do? This topic will be explained further in detail by CPA Steve Sorensen. Embezzlement, first and foremost, is a high-level white-collar crime. This suggests embezzlers are typically bright and intelligent, which makes sense as many fraudulent activities are discovered only after months or years. While personality isn’t always a reliable indicator, it should nonetheless be considered. Here are other warning signs to watch out for – the more warning signs are spotted, the bigger the suspicion may have to be.
- Wanting to take home work – Taking work home has become increasingly common, with more and more companies offering flexible work setups for employees. However, this trend doesn’t mean employers should throw caution to the wind as well, especially if the employee holds finance-related job functions. If an employee like a bookkeeper wants to take work home, ask them why first. Embezzlers usually want to take home the books so they can fix it and cover up their tracks. The most important step here is to carefully examine the books – watching out for checks or payments to a new vendor, for example.
- Unusual profit or budget shortfalls – A study on white-collar crimes revealed some of the beliefs of embezzlers; for these employees, they view white-collar crime as having no victims – only the organization they work for. Therefore, business owners should never trust an employee too much—or at least not without leaving enough checks and balances—no matter how long they have already been working or if they have had a spotless record, as beliefs are hard to uncover. Another warning sign to watch out for is unusual profit or budget shortfalls. This could mean money such as petty cash is being drained.
- Sudden lifestyle changes – At times, embezzlers are unable to help themselves from showing off that new car or designer handbag they just bought. As mentioned, personality isn’t always the best indicator, but when combined with sudden lifestyle changes, this could be a big red flag to take note of. The qualifier here is a sudden and unexplained or unreasonable kind of change. If it’s not in the realm of possibility for an employee to able to afford something with his/her salary, then checking the books is a good place to start.
In the end, even when nothing seems to be wrong, checking the books is advised by CPA Steve Sorensen. Embezzlement leaves no business immune.