Policies & Procedures to Prevent Fraud and Embezzlement

The Ugly Reality

Fraud can happen in any business. And when it does, the criminal usually is someone you’d never suspect. Embezzlers can be any age, rank or race, and either gender. They carry out their crimes for any number of reasons, although their fellow workers generally don’t know their motives, which can include drug abuse, gambling, dire financial need or mere thrills. The typical embezzler is “compulsive, was denied a promotion, has an expensive lifestyle or never takes a vacation.” Fraudulent behavior is often tied to need, opportunity and a contrived rationale for undertaking the theft.

Take the CEO who approved his own credit-card statements. When outside auditors discovered that he regularly charged a few thousand dollars a month at a particular eatery, they requested help from the restaurant’s management. A few weeks later, the restaurant’s executives reported their findings: whenever the CEO ate there, the same assistant manager, his girlfriend, served him. The CEO would leave thousand-dollar tips, which the woman redirected to her bank account. The corporation discovered the fraud when an outside accountant expressed his discomfort with its credit-...