Annual embezzlement losses are estimated to be well over $600 billion. The losses are huge and include all kinds of businesses, non-profits, government agencies, institutions, charities, individuals. Everywhere the money is. Nobody's safe.
Only about 5 percent of all fraud is detected by external auditors. Even highly trained CPAs and accountants cannot tell when there is something "wrong" with the Financial Statements. Because what's "wrong" is most often a highly skilled mis-appropriation of the funds, designed to blend in and hide among legitimate transactions. So if trained professionals aren't spotting embezzlement, who is? Most often, nobody. When it's found at all, it's generally by accident. Your losses just go on and on.
There may be signs. Experts advise owners and managers to watch their staff for employees who work unusual, unsupervised hours and who don't take time off or vacations, disgruntled employees, employees with a personal financial problem, or those who show a sudden increase in spending.
There may be signs in the accounting department. Standard, ordinary accounting practices handled in some unusual, out of the ordinary way, something that should not be happening IS happening and blamed on a software glitch, something that looks like a cash flow problem just has a "wrong" feel about it, too many mistakes that'll be corrected next time, too many excuses, too much confusion clouding every issue.
You may be hemorrhaging money with little or no reason for it. Or not. There may be no external signs of embezzlement at all.
An expert embezzler will fly completely under the radar in order to remain undetected year after year. He or she will be a person who has earned your trust, who probably does exemplary work. They never cause a problem, never seek attention, never do anything without a logical, rational reason to explain it. They may be the best friend you have on staff, the one whose betrayal is unthinkable, the last person you'd ever suspect. They may even be the person assuring you there is no problem!
The days when you could delegate your financial future to trusted employees and forget about it are over.
Embezzlement is a crime. Your embezzler is a thief, every bit as much as the person who breaks into your home and steals the silver. Problem is, you have given them keys to the house and nothing visible is missing. For all practical purposes, the theft, if there is one, is invisible.
While there may not be any external signs of it in your company, you cannot afford to ignore the possibility. Neither can you afford to get it wrong. While stopping an embezzlement is important, so is getting some of your money back. If you ARE being embezzled, you need to know that before your embezzler lawyers up.
You could appeal to external CPAs and auditors for help, but they'd likely say that lacking any real indications of embezzlement, an audit would cost you big bucks with only a 5% chance of finding anything.
But this is NOT an impossible situation. YOU can find the "indications" yourself. And you CAN do it even if you don't know a thing about bookkeeping.
Please recommend this page to your boss.
The early years of JHWhite's life-time career in accounting was in MANUAL systems. As a manual bookkeeper, she developed high level skills in detecting accounting errors and inappropriate entries that make embezzlement extremely hard to hide.
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