By John Siemer

Fraud Occurence By Industry

The year 2012 was a blockbuster year for theft in the United States, particularly in the area of  embezzlement.  The average loss for the year was about $1.4 million, and more than 2/3 of the incidents were committed by employees who held finance /bookkeeping & accounting positions. Some of the top industries affected were the non-profit and government sectors, comprising 27% of the total.

The most common embezzlement scheme involved the issuance of forged or unauthorized company checks.  Eighty-four percent of the cases involved individual perpetrators, and most major embezzlers appear to have been motivated by a desire to live in a relatively more lavish lifestyle, rather than driven by financial woes.

Enhanced Internal Controls

Since the majority of these embezzlements involve forged or unauthorized check writing, more stringent controls should be enacted.  In addition, the following steps can be taken to prevent theft:

1. Require bookkeeping personnel to take time off and vacations.  Embezzlers often take little or no vacations to perpetrate their schemes.

2. Bank reconciliations should be made by a different person than those that handle cash receipts and cash disbursements.

3. Know who your vendors are.  Embezzlers often create phony vendors and submit fraudulent invoices for payment.

4. Conduct pre-employment background checks for all personnel with fiduciary duties.

5. Prosecute perpetrators, creating a permanent record future employers can find.