How to Detect Embezzlement

Internal investigations into possible embezzlement can be difficult for everyone involved. Your attempt to detect embezzlement based on confidential information and accusations can be stymied by a disorganized and illegal investigation. You need to organize a deliberate investigation of embezzlement charges to avoid accusing innocent employees of a serious crime.

Difficulty: Moderately Challenging

Instructions

1. Track the level of supply and equipment purchases by an employee to detect potential embezzlement. Administrative assistants and buyers with broad purchasing powers may use corporate discounts to purchase high-priced items for resale.

2. Review expense accounts for every employee in your company to determine potential cases for embezzlement. You should look at the length of travels and extraneous purchases added to an account to determine whether an employee is keeping funds for personal purposes.

3. Perform a weekly inventory of your supply closet to keep track of the amount of products used by your staff. You should pay particular attention to software, blank CDs and other computer equipment that can be taken from the office and used for profit by an employee.

4. Establish a partner system in your office to help every employee stay accountable for funds and resources utilized. This system should only be established after theft or embezzlement has occurred. It can be used as a pretense for heightened security measures.

5. Audit every administrative form and external document stamped with the company name to help detect embezzlement. You should utilize a rubber stamp with a signature slot that requires your name before a document can be processed to help prevent theft.

6. Speak with managers and other mid-level staff to determine the work habits of specific employees suspected of embezzlement. You should note overtime hours, early arrivals and late departures by employees as signs of potential illegal activities.

7. Hire an independent analyst who can review company records without the emotional attachment that you have toward certain employees. You can ask an analyst to look at expense accounts and inventories, as well as performance reviews, to determine the likelihood of embezzlement.

Tips & Warnings

• Combine a rewards system with your confidential reporting system to detect embezzlement. This rewards system will yield a higher number of false alarms, but investigators will also receive higher-quality leads for potential cases of embezzlement. You should conduct one-on-one meetings with reporters once embezzlement and other crimes are confirmed.
• Avoid the use of draconian safety measures until you have confirmed embezzlement has taken place. The use of alarm systems and safes may be unnecessary and might create a distraction for workers concerned for their jobs.