How to crack the embezzlement code

When it comes down to it, embezzlement is just a more sophisticated form of monetary theft. Embezzlement can damage the profit margins of large Missouri corporations and even destroy small businesses if it is not stopped. But how could you recognize embezzlement if it is happening? Chron.com points out that there are telltale signs that might indicate someone is embezzling money from your company, if you know how to recognize them.

One indicator is unexplained drains on your company’s financial resources. Like a water leak from a faucet, you might discover your profits are not as high as they should be because they are leaking out in the form of unexplained business expenses. If these expenses are not authorized by the right personel, somebody might be writing company checks for personal gain.

Sometimes the problem may not be unexplained expenses, but unexplained clients. If you find strange vendors in your company’s expense reports that you or no one in authorized circles can explain, chances are an employee might be paying a client without your permission. In fact, the vendor and the client may be one and the same. Sometimes a check of the client’s address and an employee’s address will confirm that they are identical.

Delayed or past due payments are another warning sign. You think your company is paying off its accounts receivable, but a search of your accounts finds that an alarming number of them are past due. This can indicate that someone in accounting or who is otherwise in charge of posting payments is not paying the invoices and could be pocketing the company payments.

Missing accounting records can also raise a red flag. All business transactions should be documented and accounted for. If accounting records or contracts with clients go missing, it could be a sign that someone in the company is conducting fraudulent activity and does not want to alert management. Disorganization can also help obscure embezzlement activity. Some records may be misfiled, perhaps placed in the wrong client file or the wrong time period.

According to Findlaw, sometimes employee behavior may be a tipoff, but usually if in conjunction with suspicious accounting behaviors like the ones previously mentioned. You might have a worker on staff who acts like an absolute workaholic, logging in significant overtime, comes in on the weekends, and does not take available vacations. While hard workers are an asset, if your company is losing money suspiciously, an employee may be using overtime hours to gain access to company resources to carry out fraudulent schemes.