Detecting Embezzlement: Accounting

Embezzlement In Accounting - Complete Controller

It is a bitter reality that an employee hired by you and working with you can steal from you. Taking discounts more than allowed or carrying office supplies home often happens in offices. But, if this stealing rises to embezzlement, it is alarming for business owners. Embezzlement in accounting is not suitable for the health of your business.

Many organizations and individual business owners face employee theft and embezzlement each year. Embezzlement is theft or immoral actions by employees. According to a 2012 Association of Certified Fraud Examiners (ACFE) report, “the typical U.S. business loses 7% of its annual revenues to employee fraud,” and small businesses have the most cases and the highest losses.Cubicle to Cloud virtual business

Embezzlement is unavoidable and happens in small, big, profitable, and non-profit companies. No business owner wants to be the victim of embezzlement. Fraud affects the finances, image, and morale of the company. All factors decline after a fraudulent case. Most organizations adopt shortcuts for fraud prevention. These tactics only decrease the opportunity for fraud. Fraud deterrence is essential for all organizations. The bigger the organization, the more the chances of fraud increases. Frauds are as old as human history and can happen to any company or business despite the organizational structure and the number of workers. Small business managers trust their workers more than usual, and because of that, there may be weaker internal controls.

Studies show that embezzlement is the product of certain behaviors. In the ACFE’s report, 92% of fraudsters in cases studied exhibit behavioral warning signs before being detected. So, before instigating a full-scale witch stalk for possible fraudsters, observe and look for the understated behavioral warning signs of embezzlement in your organization.

Complete Controller. America’s Bookkeeping ExpertsThe following are the signs of embezzlement in accounting: 

Unexplainable Records

Any unexplained and unjustified changes in bookkeeping records are warning signs for embezzlement in accounting. Suppose there is a decrease in the revenues despite continuous payments from the business bank account. There are various pending payments for long periods without any justified reason. Unexplainable increases in expenses and a decrease in profits mean that money is draining out of the company to a place it is not supposed to go.

The Over-Efficient Workaholics

An accountant fraudster will go to any extent to hide their crime. More often than not, they want to work off-hours when everyone has gone home or refused vacations. They may also try to take work home. All of these activities are red alerts and need to be addressed. Keep an eye on such workaholics. In today’s busy and selfish world, some unfortunate individuals exert extra hours with bad intentions.

CorpNet. Start A New Business NowUnsatisfactory Answers

Fraudsters try to hide many documents and processes from managers and others. Managers or others become offended if they try to get involved in their work. They give unsatisfactory explanations and answers on any fault.

They are overprotective. They work alone and don’t like any involvement or interference. Records maintained by them become inaccessible and untouchable to others. When asked questions, they become overly defensive. They know their records will unveil their embezzlement, and their answers will be suspicious and unrealistic.

Financial Stress

If any accountant faces any financial stress in their life, they are more likely to plan embezzlement by using accounting records. Any unexpected financial loss like divorce, mortgage, or debt acts as the trigger for embezzlement. Know your employees by taking time for small discussions about their current situation. This way, you can detect sudden changes in their behavior and activities.


Embezzlement in accounting and bookkeeping can happen to any organization. The signs mentioned above are helpful in early detection.

Download A Free Financial ToolkitAbout 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 platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO 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.ADP. Payroll – HR – Benefits