Another pattern I have been tracking is that no contexts seem to be immune.  Individuals with access and opportunity seem to be stealing everywhere possible.  I’m not saying everyone is stealing, because that is certainly not the case.  But I am saying a significant risk exists for theft or embezzlement within every business, entity, government agency, program, club, group, and every other type of organization that maintains funds, regardless of the nature, size and context of each potential victim organization.

I truly believe employee behavior is a leading indicator, often detected long before evidence of the actual diversion of funds has materialized.  Living beyond ones means seems to come up in many of the cases.  Know your employees, and for anyone who is a member of any social club, sports program or any other member organization, know who handles your finances and what controls are in place to safeguard your funds.

Below is a small sampling of Google Alerts received today alone:

Woman jailed for embezzling youth soccer funds (over $200,000)

http://www.vancouversun.com/business/Woman+jailed+embezzling+youth+soccer+funds/6006470/story.html

A local judge accused of embezzling court funds and other misdeeds could be removed from the bench

http://www.wxyz.com/dpp/news/a-local-judge-accused-of-embezzling-court-funds-and-other-misdeeds-must-answer-for-her-actions

Sentencing for Ira town clerk who admitted embezzling

http://www.wcax.com/story/16536416/sentencing-for-vt-clerk-who-admitted-embezzling

Former Tenderloin Housing Clinic Employee Sentenced For Embezzlement

http://sfappeal.com/news/2012/01/former-tenderloin-housing-clinic-employee-sentenced-for-embezzlement.php

A Kent County minister accused of embezzlement is due in court today.

http://www.wwmt.com/news/embezzlement-1400637-accused-minister.html
Former Shelby Schools superintendent charged with embezzlement

http://www.ludingtondailynews.com/news/63161-former-shelby-schools-superintendent-charged-with-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.