The answer is yes, most employee embezzlement schemes can be prevented. There are practical measures any employer of any size can implement to prevent employee thefts and embezzlement.
However, due to the very nature of fraud, creative employees working within an environment constructed with ineffective or non-existent internal controls, or worse, complacent supervisors and owners who simply do not perform the reviews and control measures, often circumvent any preventive measures.
That is why detection measures need to be incorporated within the control structure, to detect a scheme as early as possible, and to minimize the loss to the organization. Together preventive controls coupled with detection measures are any employer’s best line of offense against the risk of employee embezzlement.
The third and possibly the most important component is to ensure the organization has adequate employee dishonesty coverage. When an employee circumvents both preventive and detection measures, the losses add up, and very often the only means to recover the diverted funds is through an insurance claim. Adequacy in this day and age should start at $100,000, but is subjective to each organization.
Last Monday my latest book was released by Wiley, Preventing and Detecting Employee Theft and Embezzlement: A Practical Guide. I encourage everyone who has employees, or who is responsible for employees within the financial areas of any business or organization, to read my latest book. While it appears to be a bit of self-promoting, I wrote this book in response to twenty years of requests from business owners and managers who direly needed a practical resource to easily follow for implementing internal controls within their business. Well, now it exists.
The book can be found anywhere on-line where books are sold. Here is one link for Amazon.