How can you catch embezzlement?

In business, embezzlement often occurs due to a trusted person within the company. Embezzlement, for instance, is a misappropriation of funds. Embezzlement can compromise your business, so when caught, you have to act quickly.

If you have a company with an accounting department, accountants can try to embezzle from your company. The Houston Chronicle describes how you can catch embezzlement.

Analyze financial documents

Financial documents are most likely to reveal embezzlement. The documents that you should analyze include:

  • Financial statements
  • Bank records
  • Credit card statements
  • Accounting documents

Treat any irregularities with suspicion. If your accounting records do not balance with your bank and credit card information, there is a high chance of embezzlement.

Check on customer accounts

Look at your customer’s credit accounts. If you find customers who consistently have a high number of credits, this might indicate a problem with one of your accountants. Embezzlers may credit a customer’s account and then take the excess money after the customer sends his or her payment. Also, analyze your accounts receivable records. Look for past due accounts. Too many past-due accounts indicate an accountant did not post received payments.

Verify all documents

The accounting records should remain organized. If they are disorganized, organize and verify that there are no records missing. If you cannot find vendor contracts or other important information, it could indicate fraud. All inventory levels should reflect your company’s revenue. If the inventory has an unexplained decline, embezzlement may be the cause.

Extra analysis of all of your financial documents can verify whether you have an embezzlement problem.