Embezzlement is a common white-collar crime that can take different forms, ranging from skimming cash from incoming sales to misusing clients’ credit card information. Since this theft occurs when employees use legitimate funds entrusted to them to manage, it’s not always easy to catch. That’s why many accounting resources are available to help. If you’re concerned about an employee misusing company funds, here’s what you should know about recognizing embezzlement and responding to it.   

What Are the Signs of Embezzlement?

Unusual Profit Loss

With a predictable cash flow, you should have a rough estimate of how much profit is pulled in each week. When this number dips but the business activity has remained consistent, an employee may be stealing.

Disorganized Financial Documents

When you entrust employees to perform accounting duties, you must monitor the documentation they submit. In many cases, embezzlers will alter or delete records to cover up traces of theft. If you spot financial documents that are missing, have strange errors, or are illegible, consider further investigation.  

Payment Tracking Issues

Employees who work in AR/AP can embezzle by claiming that certain payments were made or not and putting the difference in their pocket. You can usually spot this warning sign when a vendor says they haven’t been paid, but company records show otherwise. You might also get complaints from customers who said they have paid but are still receiving unpaid invoices.  

Unusual Work Practices

If an employee exhibits strange workplace behavior, pay closer attention to determine if they might be concealing theft. Some red flags include working after hours, being overprotective about company information, and continuing to work even if they’re sick.

How Should Bosses Respond to Suspected Embezzlement?

Don’t alert your staff to any suspicions of embezzlement, as these actions may give the perpetrator enough time to correct their actions. You also don’t want to make false accusations that can compromise workplace trust.

Instead, remain calm and consult with experts in the field. CPAs, for example, can provide forensic accounting services to pinpoint criminal activities and build a strong body of evidence. Your legal team can also make sure you’re taking the right steps to document the activity and press charges.  

When you’re worried about embezzlement in the workplace, Tudor Wilson & Associates CPAs will help you tackle the situation with confidence. Serving all types of commercial clients, this Honolulu, HI, CPA firm is qualified to conduct forensic accounting measures to identify fraudulent activities. If evidence is found, these professionals will also provide litigation support to ensure you build a strong case. Visit this Oahu accounting firm online to learn more about these financial services, or call (808) 592-2000 to discuss your concerns with an expert.