How to Prevent Embezzlement Manual (Download)

Would Embezzlement be a Disaster at Your Company?

Embezzlement Prevention is about identifying your company’s structure, and the manner in which various functions are assigned, in order to reduce “windows of opportunity” for embezzlers to act. Because embezzlement is generally a financial “habit” crime made up of a series of rhythmic, predictable and cyclic events, it becomes a simple matter to answer the question of just why certain types of companies are so susceptible to embezzling. Besides the fact that many companies store important assets like money, property and data, remember that most companies function in a traditional way.

Traditional Embezzlement:

A property theft activity that is conducted in a conventional, established, predictable, common and habitual manner.

If an employee wants to embezzle, he/she does not want to work within an industry whose unpredictable operations may expose the fraud. The embezzler must plan the misappropriation to take advantage of the opportunities presented by the rhythmic, cyclical and predictable pattern of accounting tasks and financial events.

Embezzlement Prevention Opportunities

Have you performed a “Loss Prevention Audit and Examination” to locate your company’s windows of opportunity? This risk assessment is the first step to closing those windows.

Opportunities for Embezzlement or stealing are generally available within each of the following categories:

• Policies and procedures
• Personnel
• Documents
• Computers and records
• Facilities

A company’s “corporate culture” is a significant factor when determining the company’s vulnerability to misuse and misappropriation.

Corporate Culture

An environment influenced by the prevalent morals, ethics, ideals, and standards for behavior as developed, implemented and demonstrated by management: the company’s conscience.

Embezzlement Prevention = Ethical Codes

Many financial auditors and other risk managers recommend that a company’s board of directors require the company to adopt ethical codes as a start to Embezzlement Prevention. This “Code of Conduct” is an excellent method to communicate with employees and to describe acceptable standards of behavior. This communication should deal with the solicitation and receipt of things of value; conflicts of interest; use of confidential information; and cooperation with internal investigations.

A Code of Conduct Deters Embezzlers

The company’s Code of Conduct should clearly state that an employee’s failure to cooperate with an internal investigation will subject the employee to discipline, up to and including termination. The Code of Conduct may also explain the right of the company to suspend an employee, with or without pay, during the conduct of an investigation.

Terms in the company’s Code of Conduct are often enforceable as contractual rights. Companies should be careful not to include exaggerated statements concerning standards of conduct that they are not willing to enforce in a universal manner. The selective enforcement of a Code of Conduct could result in the company not being allowed to enforce it against an employee suspected of unlawful activities.

Employees need to be shown where they fit into the company; need to know what the company stands for and what it won’t allow; and need to be led by example. If the company fails to communicate effectively its response to any of these needs, it is preparing the means for its own destruction. Embezzlers themselves cite these reasons for the discontentment that led them to commit their crimes.

The company’s Employee Handbook should include your Code of Conduct statement, which is also an excellent device to describe an employee’s rights and obligations. Employees who believe that they are treated fairly, and treated as every other employee, are less likely to become discontented and reduce the basic areas of concern that provide embezzlers the means and the motivation to commit the crime.

Reduce Embezzlement Opportunities

Break the embezzler’s windows of opportunities. Don’t let embezzlement happen at your company. Get started on your Embezzlement Prevention program today by introducing internal controls that include:

• Developing an Embezzlement Prevention Guide
• Regular audits of important processes
• A Code of Conduct
• Policies and procedures with checks and balances
• Continuous improvement to change process cycles, habits, and predictable patterns

Embezzlement is the most common financial crime in the nation and a predominant factor in the failure of all types of businesses — large and small. Losses attributed to acts of embezzlement are more significant than losses attributed to all other types of business crimes combined.

Use the Embezzlement Prevention Manual Before Trouble Starts

This Embezzlement Prevention Guide offers a strategic approach to reducing losses from internal crimes. This Guide contains an introduction to embezzlement, a detailed training program and reference guide to help customize a comprehensive embezzlement prevention program for your company covering all employee levels: staff, management and executive.

Who Will Benefit From This Embezzlement Prevention Manual?

If you are in any way responsible for protecting the assets of your company, this Embezzlement Prevention Manual will be of value.