Preventing employee theft is not an easy task. Today’s business owner knows that safety procedures and thorough background checks are not enough. This is a battle one must enter well-armed and the best weapon against this disturbingly common crime is information. You need to know who and what you are up against.
In order to discourage possible embezzlements, business owners must take a hands-on approach. Being a proactive member of all auditing procedures in your organization will help you detect irregularities. Make yourself visible, let potential embezzlers know that you are involved in safety procedures and updated in day-to-day financial and accounting related activities.
Every year, Marquet International, Ltd. a boutique business investigations, due diligence, litigation support and security consulting firm, publishes a study of major embezzlement cases in the United States. The 2011 study, analyzed a total of 485 cases active in the United States in 2010.
Following are some significant findings from the 2010 study:
- The average loss was nearly $1 million
- The most common embezzlement scheme involved the forgery or unauthorized issuance of company checks
- Two-thirds of the incidents were committed by employees who held finance & accounting positions
- The average scheme lasted more than 4½ years
- The average prison sentence for major embezzlers was just under 4 years
- Nearly 2/3 of all incidents involved female perpetrators
- Nearly 20 percent of all losses were inflicted upon financial institutions
According to Christopher T. Marquet, CEO of Marquet International, “2010 was a banner year for employee theft in the United States.” “It is staggering how much money was stolen from companies last year by their employees, spanning many years in some cases before getting caught.”
Mr. Marquet also adds “Rather than stealing because they have severe financial problems, we found that most embezzlers appear to be driven by greed or a need to live a lifestyle much more lavish than they could not otherwise achieve. While the bad economy may have had something to do with the large number of cases we identified, there are other drivers motivating these white collar criminals and there is always an ambient level of fraud, theft, waste and abuse in any organization.”
The 2010 Marquet Report on Embezzlement is available at
The statistics are not very encouraging, but keep in mind that while this is a reality you will not be able to completely shield your business from; there are steps that can be taken to mitigate it. As a small business owner, you are not willing to risk all you have worked for to the consequences of an embezzlement scheme. On the other hand, you cannot afford to dedicate any additional resources to safeguard the integrity of your financial/bookkeeping functions.
If you are looking for a safe, inexpensive solution, outsourcing your bookkeeping needs is an option worth exploring. Cash Flow Accounting provides secure and affordable solutions for your business. Our high quality procedures will help your organization help time and money. For more information, please email us at Info@CashFlowAccounting.com