What Should I Do If I Suspect An Employee Of Embezzlement?
Everyone's job comes with a certain amount of privilege, but for employees in the finance world, as well as employees in accounting departments across the country, that privilege also comes with an expectation of trust.
When handling company finances, it is a reasonable expectation that any and all company revenue and property stay within the confines of the business. A breach of that expected trust may constitute embezzlement.
Step One: Don't Let Your Suspicions Get The Best Of You
As human beings, we can allow ourselves to work backwards from the worst case scenario. In the early days of embezzlement cases, this tendency can only hurt you.
It's true that embezzlement typically occurs one of three ways:
The most important thing you can do from the very beginning is to eliminate the possibility that the missing funds are a result of human error.
It does happen. An employee leaves the premises on a bank run and forgets to leave word with anyone, or a deposit doesn't make it into the log by mistake. These things are the cost of doing business on a daily basis. Don't raise the issue of embezzlement unnecessarily. It could lead to a defamation lawsuit against you.
Step Two: Look For Red Flags
Even if you have a high suspicion of fraud, do not bring the issue to an employee’s attention. Remember, you will have to prove the fraud has occurred, so look for warning signs.
Pay particular attention to where your mail is going and any accounts payable issues that may be reported. It is never legally permissible for an employee to re-route company mail to their home address. Also, if you begin to see "non-payment of taxes" notices from the IRS and repeated requests for payment from vendors, it's a good bet your revenue isn't going where you think it is.
Yes, embezzlement can even occur when your company appears to be turning a fair profit. Check the cash reserves to be sure. If the books and the actuals aren't lining up, something is wrong.
Step Three: Take Your Suspicions To A Lawyer
Resist the urge to tackle this issue on your own. An employee who gets tipped off can make legal counter moves to try and cover their tracks. Your burden of proof and professional reputation may also be at risk. A lawyer can investigate and safeguard your case.
Stockard, Johnston, Brown & Netardus, P.C. in Amarillo, Texas, understand the expert delicacy these situations call for.
When handling company finances, it is a reasonable expectation that any and all company revenue and property stay within the confines of the business. A breach of that expected trust may constitute embezzlement.
Step One: Don't Let Your Suspicions Get The Best Of You
As human beings, we can allow ourselves to work backwards from the worst case scenario. In the early days of embezzlement cases, this tendency can only hurt you.
It's true that embezzlement typically occurs one of three ways:
- "Skimming off the top" of company earnings resulting in a large-scale loss when taken cumulatively
- Under-reporting profits and sales
- Taking a lump sum
The most important thing you can do from the very beginning is to eliminate the possibility that the missing funds are a result of human error.
It does happen. An employee leaves the premises on a bank run and forgets to leave word with anyone, or a deposit doesn't make it into the log by mistake. These things are the cost of doing business on a daily basis. Don't raise the issue of embezzlement unnecessarily. It could lead to a defamation lawsuit against you.
Step Two: Look For Red Flags
Even if you have a high suspicion of fraud, do not bring the issue to an employee’s attention. Remember, you will have to prove the fraud has occurred, so look for warning signs.
Pay particular attention to where your mail is going and any accounts payable issues that may be reported. It is never legally permissible for an employee to re-route company mail to their home address. Also, if you begin to see "non-payment of taxes" notices from the IRS and repeated requests for payment from vendors, it's a good bet your revenue isn't going where you think it is.
Yes, embezzlement can even occur when your company appears to be turning a fair profit. Check the cash reserves to be sure. If the books and the actuals aren't lining up, something is wrong.
Step Three: Take Your Suspicions To A Lawyer
Resist the urge to tackle this issue on your own. An employee who gets tipped off can make legal counter moves to try and cover their tracks. Your burden of proof and professional reputation may also be at risk. A lawyer can investigate and safeguard your case.
Stockard, Johnston, Brown & Netardus, P.C. in Amarillo, Texas, understand the expert delicacy these situations call for.