9 Steps to Take if You Suspect Money Embezzlement

Money Embezzlement is a form of crime in money matters, which might raise its ugly head in any and every organization. It is a kind of theft of money that is entrusted to the care of any person by his employer or his clients. Embezzlement destroys trust in a professional relationship, but, in this case, it can destroy a company’s finances and reputation. 

On the part of the organization, it should, in the light of the fact that it suspects that there are embezzlement and pilferage of funds taking place, take immediate steps because the longer an organization’s embezzlement goes undetected, the more loss it will suffer. The discussions in this paper emanate from what is embezzlement and what it means when an organization should undertake key actions in the process of investigating a case in which funds are suspected to have been embezzled. 

This now calls for immediate financial steps to be taken to determine whether the embezzlement has been occurring and to cut out from any other criminal activities that may be going on and further loss incurred.

Conduct an Immediate Accounting Review

In cases where there is suspicion of money embezzlement, financial records must not be put off. Check bank statements, credit card bills, invoices, receipts, and checkbooks, and pit them against records in looking for irregularities. The accounting review should seek to establish if there is an amount of money that is likely to be missing from the organization’s account due to embezzlement.

Separate the Suspected Employee’s Financial Duties

Separate the suspected employee’s financial duties from all access to money and records. Put simply, it is when someone in a position of financial trust steals funds they have access to due to their job.  To prevent the estimated average of $200,000 more from being stolen when a suspected employee has not been stopped, the suspected employee should no longer be involved in any financial tasks. To prevent further embezzlement or destruction of evidence, the suspected employee should no longer be involved in any financial tasks like making deposits or processing payments. Remove their access and responsibilities involving organizational funds until an investigation is completed.

Review and Restrict Signature Access

Review and restrict signature access on all financial accounts to prevent additional embezzlement from occurring. The difference between fraud and embezzlement is that fraud involves deceiving someone into giving up money, while Money embezzlement involves stealing money that was already entrusted to your care due to your job. To stop embezzlement in its tracks, audit all accounts with signature authority like banks, credit cards, or purchase agreements. Change locks, passwords, and signatories as needed to sever the suspect’s control over organizational finances.

Audit Bank Statements, Credit Card Bills and Receipts

Audit all available bank statements, credit card bills, and receipts going back at least a year. It is common for money embezzlement to happen in small, planned steals over time. Audit all available bank statements, credit card bills, and receipts going back at least a year. According to the Association of Certified Fraud Examiners, nearly 50% of money embezzlement schemes involve less than $50,000 stolen for 18 months or more. The relationship between embezzlement and money laundering is that embezzlers have to hide where ill-gotten money came from to avoid getting caught. A discrepancy could reveal a portion of the trail of dirty money.

Reconcile Cash on Hand and Petty Cash Funds

Reconcile cash on hand, petty cash amounts, and safe deposit boxes with the records. Compare the actual physical cash and inventories to the written ledgers. Fraud and Money embezzlement involve tampering with petty cash which is easier to steal from without close oversight. Make sure no money is missing that was recorded as on hand. Shortages could point to money embezzlement over time as the perpetrator took funds without notice.

Examine Expense Reports and Related Receipts

Look for spending inconsistencies, doctored receipts, or amounts that seem personal rather than business-related. Since money laundering is the process of making obtained money seem legitimate, receipts could show embezzled funds being disguised as ordinary company expenses. Matching receipts to reports is vital to catch embezzlers.

Check for any Unauthorized Accounts or Credit Lines

Money embezzlers sometimes open secret financial accounts to launder dirty money from theft. Money embezzlers sometimes open 2-4 secret financial accounts on average with average total balances exceeding $30,000 to launder dirty money from theft over time. They use these undisclosed accounts to filter stolen money through to mask its criminal source. Be thorough, search online and at all banks the company has done business with.

Consult with Auditors or Forensic Accountants

Consult with expert auditors or forensic accountants experienced in anti-money laundering procedures. Given the complexities of identifying money laundering through doctored records, outside financial professionals can investigate with heightened expertise. Forensic auditors know what signs to look for that indicate potential Money embezzlement. They are trained in anti-money laundering compliance and have legal reporting responsibilities if they uncover suspicious transactions.

Report Money Embezzlement to the Relevant Authorities

It is important to report the financial crime to the right authorities if the accounting review and audit show clear signs of fraud. Do not try to handle the situation without notifying the police or filing a report. Money Embezzlement is illegal and serious consequences can result, including civil lawsuits and criminal charges. Provide any documentation and records that prove the employee stole missing money in a position of financial trust. Cooperate with investigation by answering questions and allowing access to all relevant documents and systems.