Creating Policies to Prevent Embezzlement Cases

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Embezzlement cases are on the rise in the United States. In 2011, the FBI pursued 726 cases of corporate fraud, up 10 percent from the previous year. Embezzlement and fraud cases do not only occur at Fortune 500 companies. Those are the ones that make headlines, but these crimes can occur anywhere.

According to an article on universitybusiness.com, there were 13 embezzlement cases at universities in 2010 and 2011 alone. These cases totaled more than $16.5 million in direct losses and had incalculable effect on those college’s reputations, endowment and enrollment.

The same could be true for your company. It is hard for companies to shake the infamy that comes from being victimized by embezzlement. The best way to combat embezzlement and corporate fraud cases is to create a company culture and set of policies that actively discourage this type of behavior.

The following is a list of policies that can lessen the risk of embezzlement:

  • Never give one person universal access to the company’s finances or resources. Dividing financial responsibilities and preventing any single individual from gaining too much control over the company’s finances can help mitigate the risk of one “rogue” employee. For example, the person who reconciles the books each day should be different than the one making cash disbursements.
  • Require two signatures on checks over a certain amount. Many of the most popular embezzlement schemes involve a few large lump sums rather than many smaller ones.
  • Conduct random and regular audits. In some cases, just being physically present in the bookkeeper’s office on a regular basis will discourage any dishonesty. When authority keeps in close contact with the bookkeepers, they are continually reminded that they work for an attentive boss.
  • Conduct background checks on all the prospective employees your company attracts. The behavior that leads to embezzlement has been shown to be addictive so those who have been found guilty of it once are high risks for recidivism. On the flip side, prosecute those who perpetrate embezzlement against your company so that the individual’s future prospective employers will have a record of the embezzler’s past.

Stopping embezzlement at your business requires an ongoing combination of vigilance and weariness. If you put the necessary policies in place, you won’t have to spend every waking moment worrying about whose hand is going to get caught in the cookie jar.