fox in the hen house - Complete Controller

Embezzlement is a type of financial theft. Embezzlement is a term usually used for fraud or theft made by a trusted employee in a business. Embezzlement is generally a continuous act of stealing small amounts from the company’s finances to fund personal expenses.

In the case of embezzlement, the employer can bring a legal case to court against the employee. The penalties depend upon the amount of theft. After a court case, if found guilty, the embezzler may be required to pay back the money or maybe fined. Some of the cases may cause a prison sentence. Accounting embezzlement is the manipulation of bookkeeping records to hide the theft of assets. Assets can be both funds or property. A bookkeeper who takes customer’s refunds and keeps them as their own is an example of embezzlement. Embezzlement impacts the finances of your business in the long run. Check out America's Best Bookkeepers

A fox in a financial hen house is, metaphorically speaking, for those trusted to manage bookkeeping work who ultimately misuse their position. They manipulate figures in accounting to make frequent thefts.

Focus on two factors to prevent embezzlement in your business bookkeeping.

 

The Signs of Embezzelment

The difference in Accounting Statements

If you have an electronic system or your accounting statements are done manually on a register, the financial statements should match the cash flow statements and balance sheet. There is a chance of honest error in manual bookkeeping, but keep an eye on any difference in the numbers on your accounting statements.

The Employee is Spending More than Others

If one of your employees starts spending more than others, keep a close look at their activities in your business functions. They might be involved in some fraudulent practices. A fixed pay usually does not leave room for spending extra than actual needs. Check out America's Best Bookkeepers

Excessive Transactions

If there are numerous transactions to clear errors, it might be done to hide fraud or theft. If there is more than one payment for a single bill, it again might be the case of fraud. Keep a very watchful eye on the bookkeeping in your business.

Refusal to Leave Bookkeeping Tasks to Others

If an employee is working hard in a company and is not leaving work for others, a check on their activities must be kept. They might be involved in fraudulent practices.

Unusual Working Hours

If an employee has a routine of unusual working hours, they might be involved in some fraud in your business bookkeeping. Specifically, if they are frequently coming in early, leaving late, and doing overtime without a demand for extra payment, these are signs of suspicious interest in your business.

Motives of Embezzlement

There are various motives to commit embezzlement for an employee.

Revenge Motives

When interviewed, most embezzlers said the reason behind embezzlement was to take revenge for the mistreatment they had received at the company. Check out America's Best Bookkeepers

For example, if an employee had worked very hard to get a raise but was denied, they can develop ill feelings towards the owner and the company. Unfortunately, this is a common practice of employers to make their employees work longer hours without many benefits. Working long hours often results in an increased profit margin, but the employees are often not given incentives. This is the most common cause of embezzlement. The employees try to get the business back, or they want to hit the employer where it hurts the most. Of course, financial loss, though small, hurts the employer and their company.

Lifestyle Motives

There are reported cases where an employee makes frequent thefts from a company’s funding to support a lavish lifestyle.

Addiction Motives

Addiction is the root cause of so many physical ailments as well as unethical practices. Those employees who are passing through emotional stress or trauma must be given emotional support. A few fall victim to drugs. A paycheck is not enough to support their addiction, and, often, they find the only way out is to steal from their employer.

Conclusion

To prevent embezzlement, you must focus on cash transactions and the person in the fiduciary position. Also, be aware of the warning signs of theft in your company. You must be mindful of unusual practices going on in your office. Besides these precautions, build a good relationship with your employees. This will ensure trust between you and those that work for you.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers