How do I Recognize Embezzling?

It can often be difficult to recognize that embezzling is taking place, since employee theft is often carried out by the most trusted people in an organization. The embezzler may come in to work early and stay late, exhibiting the same types of behavior that any model employee would. Some signs that embezzling is taking place are inaccurate or suspicious books, improperly balanced accounts, and excess shrinkage or scrap. An embezzler can often be recognized by their erratic behavior or lifestyle changes, as many people have difficulty dealing with the guilt of stealing from an employer.

Embezzling does not necessarily involve the direct theft of cash, though it sometimes does. Common forms of employee theft include the misappropriation of business or office supplies, or inappropriately marking good stock as scrap or shrinkage. Inappropriate use of a company credit card is another common form of embezzlement, especially if nobody is keeping track of the charges. Double billing and other accounting tricks can also be used. Embezzlement is only limited by the creativity of the thief, and new ways of stealing from an employer are always being thought up.

It can take a careful eye and the ability to remove yourself from the situation emotionally to determine that someone you trust is stealing from your business. Embezzlers are often very trusted in the business or organization, which gives them access to money while also removing them from suspicion. Many embezzlers are first time thieves though, so they will often make mistakes or behave erratically. If an employee suddenly insists on taking his work home or has made abrupt lifestyle changes, there may be something wrong. Many embezzlers spend the money instead of saving it, so sudden, unexplained purchases may indicate that embezzling is taking place.

Most businesses accept a certain amount of shrinkage, though excess levels or sudden changes often indicate that an employee may be stealing. If there is a sudden increase in shrinkage or unexplained shortages of stock, you may want to perform spot checks or have someone else double check the work of employees that could be responsible. This can also apply to books that are improperly balanced, financial statements that are poorly organized, or payments that appear to be duplicates. Accusing someone of embezzling without proof can be disastrous, so signs such as these should typically be investigated with care.

There are also a variety of ways to stop or prevent embezzling, whether or not you suspect it is taking place. Shuffling duty rosters or projects can deter a thief from acting, as he will know that someone might become aware of his plan. Surprise audits can also be effective in both discovering theft and preventing future embezzling. If a potential thief knows his work could be audited at any time, he may not go through with their embezzlement plans.