Preventing Embezzlement


Issue Action
Audit Periodically audit your check stock to ensure all unused checks are accounted for.
Bank accounts For a better audit trail, consider separate accounts and separate employees for accounts payable and accounts receivable.
Bank statements Examine statements immediately when they are received, to detect fraudulent account activity.
Segregation of duties Have someone independent of check-writing responsibilities reconcile your bank accounts. Rotate personnel on a quarterly basis.

Always provide dual approvals on wire and ACH transactions. This ensures more than one employee is reviewing them.
Check stock Keep your check stock locked up at all times. When checks are printed, every check should be accounted for, including voided, jammed and cancelled checks.
Document management Protect all documents by locking them up and always maintaining a "clean desk" policy. If documents need to be discarded, shred them.
Employees Screen new employees with background checks before making a job offer, even part-time employees or contractors.
Paper vs. electronic Electronic processing and operations reduce risk and increase controls by making it tougher to destroy and hide important documents.
The "trusted" employee More times than not, the "trusted" employee is responsible for embezzling funds. They get forgotten about because they've been around a while and they know the system.
Protect all accounting documents Secure check stock, signature equipment, invoices, statements and other critical information.