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Lead Your Team Managing

Signs Your Employees Might Be Stealing Money

stealing a raise

Got an employee that never wants to take vacation? Or one that likes to take work home at night? You might want to make sure they're not up to no good. Employees' fingers are stickier than ever, new research shows, and those are two of the signs that an employee might be stealing money from your company.

U.S. employee theft soared in 2012, with 528 cases of embezzlement of at least $100,000, an 11 percent increase from 2011 and the highest number in the five-year history of the study by security consulting firm  Marquet International.

Among the cases studied, the average loss was about $1.4 million, with two-thirds of the thefts perpetrated by employees who held finance, bookkeeping or accounting positions. In addition, the average scheme, the most common of which involved issuing forged or unauthorized company checks, lasted nearly five years.

And while nearly 60 percent of employee thieves were women, male perpetrators, on average, embezzled nearly three times as much as females, the research found. Gambling was a clear motivating factor in a third of the cases.

Christopher T. Marquet, CEO of Marquet International, said he is expecting high rates of embezzlement for the next several years due to the ailing economy.

“Sadly, employee theft is alive, well and thriving in the current U.S. business climate,” Marquet said. “With each passing year, the embezzlement schemes we see seem to get bigger and bigger.”

The study shows that among states, Iowa had the highest risk for loss due to embezzlement in 2012. The Hawkeye State was followed by Hawaii, Rhode Island, Montana, Nevada, Wyoming, Illinois, Florida and Vermont.

Marquet International offers business several preventive strategies to address the problem of employee theft:

  • Do not allow a single individual access to all aspects of company finances. Make sure there is a division of duties in the finance department.
  • Regularly rotate responsibilities for bookkeeping personnel.
  • Require bookkeeping personnel to take time off and vacations. Embezzlers often take little or no vacations to perpetrate their schemes.
  • Do not allow bookkeepers to take work home.
  • Require two signatories on outgoing checks above a certain nominal amount. The signatories should be different individuals from the check preparer.
  • Examine canceled checks regularly. One common method of embezzlement involves the forgery of checks. Another is to have them payable to the embezzler or their personal vendors.
  • Maintain unused checks in a lockbox. Be sure all checks, purchase orders and invoices are numbered consecutively and reconcile any of those missing.
  • Conduct regular as well as random audits. Owners should take a hands-on management approach by physically spending time with the bookkeeping department.
  • Know who your vendors are. Embezzlers often create phony vendors and submit fraudulent invoices for payment.
  • Examine payroll records regularly. Some embezzlers issue themselves extra paychecks and bonuses through the payroll system.
  • Investigate customer and vendor complaints promptly. If vendors are not being paid as expected, it may be a sign that the payment checks are being diverted.
  • Conduct pre-employment background checks for all personnel with fiduciary duties.
  • The HR department should close attention to the employee grapevine and any suggestions that someone has a gambling problem should be immediately addressed.
  • Prosecute perpetrators, creating a permanent record future employers can find.

The data in the study originates from an analysis of individual cases of employee theft in the U.S. in which at least $100,000 was misappropriated. These cases either became publicly known or were active in the judiciary process during the 2012 calendar year

Follow Chad Brooks on Twitter @cbrooks76 or BusinessNewsDaily @BNDarticles. We're also on Facebook & Google+. The story was originally published on BusinessNewsDaily.

Chad Brooks

Chad Brooks is a Chicago-based writer and editor with nearly 20 years in media. A 1998 journalism graduate of Indiana University, Chad began his career with Business News Daily in 2011 as a freelance writer. In 2014, he joined the staff full time as a senior writer. Before Business News Daily, Chad spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including local and state government, crime, the legal system and education. Chad has also worked on the other side of the media industry, promoting small businesses throughout the United States for two years in a public relations role. His first book, How to Start a Home-Based App Development Business, was published in 2014. He lives with his wife and daughter in the Chicago suburbs.