Investigating Employee Embezzlement

Investigating Employee Embezzlement

Employee embezzlement is, unfortunately, a frequent occurrence in the workplace and often goes unnoticed for months or even years. Both outright stolen and mishandled funds can constitute embezzlement and lead to significant financial losses for your company or business. 

What Is Employee Embezzlement?

Employee embezzlement is when an entrusted person steals from the business they are employed by. Some examples include padding expenses, creating fake vendor payments, or stealing customer credit card data.  Vigilance is key to both preventing and eliminating these opportunities and others. When evidence or suspicion is present, action should be taken immediately. Recovering embezzled funds is a long and complicated process that requires the professional help of an experienced forensic accountant.

What Does Employee Embezzlement Look Like?

There are several questions to consider when establishing the likelihood of embezzlement at your company or business. Considering these questions can also help you to discover any opportunities for potential embezzlement which may exist, and which employees may be involved. 

  1. Is it one or multiple employees taking money from the company or business? According to this study, 79% of embezzlement cases include more than one culprit. 
  2. Do you see inconsistencies in your organization’s financial records?
  3. Missing financial records, unknown vendors, and unapproved payments are all red flags.
  4. Who has access to financial records and clearance to access funds? This study states 85% of employment embezzlement cases are perpetrated by an employee at the management level or above.

How Can I Investigate Employee Embezzlement?

If you suspect employee embezzlement is happening at your company or business, it is important to act fast. Theft of large sums can happen quickly and go unnoticed for years or even decades. Additionally, it is not always possible to recover all embezzled funds. The sooner you act, the more likely you are to recover as much money as possible.

Because so many cases of fraud include multiple people, uncovering the truth can quickly become complex and convoluted. A forensic accountant possesses the skill set to interpret and properly analyze discrepancies. They are specially trained to search for specific, key pieces of evidence and information. A forensic accountant methodically calculates both the magnitude and the duration of embezzlement, as well as identifies the employee or employees responsible for the misappropriation.  

A forensic accountant’s expertise is essential in quantifying all the damages sustained in a legal dispute. Once the forensic accountant determines the extent of the activity, the evidence is documented in the form of an investigation report. This report is critical to recovering the embezzled funds through subsequent legal prosecution. Without a detailed report, a successful resolution in the form of recovered funds may not be possible.

In addition to facilitating the possibility of recovering losses, a forensic accountant will work with you to pinpoint areas in which the opportunity to keep this from happening again. A forensic accountant will offer advice on methods and strategies to be more proactive about possible employee embezzlement in the future. This insight is critical in preventing future employee embezzlement.

If you suspect employee embezzlement, take control of the situation today. Contact a forensic accountant immediately to protect your company or business.