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Keep Your Eyes Open: Signs of Embezzlement.

Posted: Sep 22, 2016
Categories: Blog Posts
Comments: 0

It might come as a surprise to know that thieves aren’t always easily spotted. You very well may be working with a thief right in your office! These well-dressed thieves, hiding in cubicles, can destroy your company before you can even spot them, and studies show that only 20-40 percent of companies will recover any stolen money. Shocking! So, wouldn’t you rather know the signs to look for ahead of time, and save you and your company from fraud and the possible end of your business or career?!? I know I sure would! Let’s take a look at the warning signs together, and help you know how to spot embezzlers.


A Marquette International study found that the guilty employee was more likely to be:

o   Female (64%)

o   Working in finance, bookkeeping or accounting (66%)

o   Acting alone (84%)


Along with these startling statistics, you should also be aware of the 4 D’s that push employees toward embezzlement and theft. The 4 D’s are:

o   Debt

o   Divorce

o   Drugs

o   Disgruntlement


But even if you know of someone that is dealing with one or more of these pressures, you aren’t capable of monitoring them 24/7. You can, however, make fraud more difficult, and more obvious, by following these steps:

·        Open a depository lock box with your bank- Most banks will accept checks directly from your clients/customers and deposit them for you! By putting your bank’s address on your invoices, you can have your clients send payments directly to the bank, therefore eliminating the need for anyone to leave their desk and take deposits to the bank. This creates less room for an employee to steal or misappropriate a customer’s payment.


·        Touch the checks last- when you sign checks, don’t hand them to someone else for distribution. Instead, mail them, or pass them out yourself. Payroll is the most often abused system, so keep a close eye on it!


·        Separate the financial duties- This is a huge issue for small business! If one person is opening the mail, writing checks, paying bills and mailing checks, that’s a problem! Divide up the accounting duties between at least two people. The person who enters the bills, should not also write the checks. This not only helps reduce the opportunity for fraud, but also helps eliminate mistakes and oversights. We suggest hiring a professional, insured bookkeeper or firm to do quarterly or annual reviews at a lower cost than an audit (if you have someone on staff that does the day to day operations).


·        Pay attention to your bank statements- Your bank is your partner in avoiding and uncovering theft. Make sure to always look at the original statements straight from the bank. Have them sent to your house if necessary! If ANYTHING looks funny to you on the statements, track it down! Same goes for credit card statements.


·        Two-step approvals- Use a system like where there is one person you enters the bills, and then an approver/manager will approve the bills before they get paid. Even if you don’t use a system as mentioned above, you can always have a two-step approval process. The more accountability, the better.



·        Prevention, not cure- Start with a thorough audit on your own, check the policies and procedures you have in place in your accounting department, find the concentrations of power and break them up. Turn to your bank and make use of their cash management and treasury management services. Be proactive and not reactive! It’s also important to know that a bookkeeping firm can come in and setup internal processes and procedures to follow that reduce errors and the risk of embezzlement!



Now, let’s talk about how to know if your Bookkeeper is embezzling. As mentioned earlier, 66% of embezzlement happens in the finance, bookkeeping and accounting fields. That’s crazy, but makes sense! The people that know how to handle money, could very well be the ones misusing it right under your nose. Here are some signs that your Bookkeeper could be stealing from you:


            Your Bookkeeper- never sends you financial reports on time.

            Your Bookkeeper- never has answers to your questions readily available.

Your Bookkeeper- asks for signature authority on your checking / savings / payroll accounts

            Your Bookkeeper- has a lifestyle that seems above what they are earning

Your Bookkeeper - Takes Records Home to work on or they want to work in the office when no one is around (Fraudulent activities are easier when nobody is around).

Your Bookkeeper - Gets defensive when you or your CPA asks questions.

Your Bookkeeper - Has access to your credit/debit cards, not just your online accounts.

Your Bookkeeper - Has QuickBooks in a complete mess and you cannot understand any of it.

You Bookkeeper - Tries to explain away delinquency tax notices.

Your Bookkeeper - Insists on picking up the daily mail.

Your Bookkeeper - Misplaces payroll receipts, deposit records, supplier letters and estimates.

             Your Bookkeeper - Makes the bank deposits and they seem to be too small.

Your Bookkeeper - Shows signs of a drinking, drug, or gambling problem or family financial problems.

Your Bookkeeper - Suggested they could save money by getting rid of the outside accounting firm.

Your Bookkeeper - Gets angry when you ask for a QuickBooks report

Your Bookkeeper - Tries to blame the previous Bookkeeper or outside accounting firm for messy QuickBooks

Your Bookkeeper- Pays bills with Cashier’s Checks (When you look it up on the internet it will only show as a withdrawal.).


Always hire a trusted Bookkeeper! One with good reviews, someone you know has a solid reputation, and one that is known in your community. It is also important to know your own business and be actively involved, that way you will notice if something is out of the ordinary.

To The Rescue Bookkeeping is a company you can trust! Call us today if you have any questions! We would love to serve you!





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