Posts Tagged ‘employee theft’

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8
Jul/100

Can You Prevent Employee Embezzlements?

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.

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13
Jun/106

Embezzlement and Gambling… In Connecticut?

After speaking at a recent session following a presentation of gambling as an addiction, I started paying closer attention to this issue.  In Connecticut we have two casinos that opened about ten years ago.  While embezzlement to support a gambling problem has come up in my cases, it hasn’t been as prevalent as one would think with two casinos in the state.

What amazes me more than the gambling is the amounts that can be lost, and with the embezzlements, the amounts that can be diverted from an organization to support gambling without the organization missing the funds.

Case in point comes from an article in today’s Journal Inquirer, a local Connecticut newspaper.  “Woman gets 9 months for thefts.”

The woman in the article was convicted of embezzling $335,000 from a local school lunch program.  She was the director of dining services for the local town, and took cafeteria receipts, concealing the thefts with falsified logs.  The article also stated she lost more than $380,000 over six years gambling at the slot machines.

The real questions I have after reading this article are 1) how much funds flow through this town’s cafeteria services to have been able to loose $335,000 and not miss the funds, and 2) where were the basic level internal controls over cash receipts, collections, entries and deposits to have both prevented this from happening in the first place, and also to have detected discrepancies as soon as they started to occur?

I guess a third question would be fair as well – towns like this town undergo annual financial audits by outside accounting firms.  Given the existence of casinos in CT and the high risks of gambling and embezzlement, why wasn’t such a large theft detected as part of any year’s audit?

Just makes me wonder just how much fraud, theft and embezzlement is occurring as we speak, waiting to be detected or discovered, or more likely, waiting for accidental identification after the snowball effect has occurred.

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15
Apr/100

Keeping Up With Embezzling? Shop at Staples!

In the movie “Men In Black” (MIB) staring Tommy Lee Jones, Will Smith and Vincent D’Onofrio, there is a scene where they visit a newsstand to collect the recent tabloids.  Kay (Jones) tells Smith that the tabloids are what they use to keep track of the aliens living on the planet. He makes a reference to Elvis, and tells him he isn’t dead, he simply returned to his home planet.

If you want to remain current in the world of employee embezzlement, I suggest you develop a similar routine to keep up with the latest developments.

I am amazed that some types of employee thefts, tried and true for years on end, continues to plague employers in this day, especially when they are very well known and very basic schemes.

My routine involves shopping at Staples, although any office supply store would suffice.  It is there that you will learn the latest types of pens, inks and other office supplies that can be used by an ill-willed employee to steal from the company.

The latest is the revival of the erasable ink pens.  There simply is no place for erasable ink pens (or pencils) in the accounting department of any employer.  For example, checks manually prepared using erasable ink pens can be altered after they are signed – the thefts are just that easy.  This is why you need to know what these pens look like, and scream if you see your staff using them.

Pilot’s “Frixion” are the latest rage.  The ink can be removed by friction.  Simply use the rubber end of the pen and erase off the writings.  There is no place for these in the finance and bookkeeping offices.  You need to know what they look like, and ensure they are not being used.  Better still, never have manual checks altogether – insist all checks are computer generated from your accounting system.

What the Frixion package does not tell you is that the ink is also thermostatic ink (reacts to temperature).  If you write with the pen and heat up the area where you wrote, the ink will go transparent.  Once cooled, the ink will re-appear.  Fun for a science project, and for ensuring a document is the original, but no place for this in accounting.

I encourage you in your battle against employee fraud to visit your local office supplier on a regular basis, to watch for the latest items.

Watch for my next post – USB Jump drives.

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