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Embezzlement in Business Associations —The Risk is Real

Embezzlement in business associations is a serious problem. The embezzler could be virtually anyone—from the top position to a non-salary volunteer—this person generally holds a position of trust, has greatest opportunity, is least suspected, and has minimal supervisory oversight.

For example:

As the above cases reveal, the risk of embezzlement in business associations is indisputable. However, you can reduce the risk of embezzlement in business associations:

1.     Recognize the Threat: Don’t become complacent by believing your accountant will discover fraudulent acts. Learn the warning signals for embezzlement in business associations.

2.      New Hires: A major step in controlling embezzlement in business associations begins at the point of hire. Reduce the risk of embezzlement in business associations by conducting comprehensive background and credit checks.

3.      Climate of Honesty: Every leader has an enormous influence on the climate of honesty and the ethical conduct of every person within the association. As opportunities present themselves, openly discuss with board members your association’s definition of honesty.

4.      Multiple Tasking: No single employee should have the ability to affect every stage of a critical work process; the individual writing checks should never sign checks; the person opening mail should not record receivables and reconcile accounts.

5.      Supervisory Oversight: Proper oversight helps to ensure that adequate controls are in place and enforced.

6.      Fidelity Insurance: If you don’t already have, seriously consider a fidelity insurance policy.

Learn more ways to prevent internal fraud and embezzlement in business associations by ordering your copy of Business Fraud: From Trust to Betrayal today!