It’s natural for a business owner to be concerned about embezzlement, especially if he’s not familiar with bookkeeping. So, if you are being embezzled, what might it actually look like?
Let’s be honest, it’s not likely that someone is going to embezzle an obvious 100 grand from you. Anyone can notice that. People who embezzle usually go for small sums that add up over time. This sum is small enough that unless you’re constantly staring at your bank statements, you probably won’t notice. Fortunately, as bookkeepers, we are constantly staring at bank statements. Here are some of the things we review regularly to see if there are any questionable transactions.
Statements don’t match: If the bank statement and the register in Quickbooks don’t match, that can clue us in to a problem. This would be the most common place for embezzlement to show up. Checks that were not processed through normal channels or amounts that are different than originally posted in Quickbooks.
Miscellaneous transactions: All businesses have these, they’re not automatically bad. However, your bookkeeper should be talking to you about these. If there are payments here that you can’t account for, and your bookkeeper can’t trace in your bank feed, they could be suspect.
Extra Payroll: Embezzlement can happen when an employee pays themselves a bit extra. As a business owner, you may have payroll processing assigned to an employee, but you should be sure to review the payroll reports regularly, checking rates of pay, number of hours and any reimbursements.
Embezzlement is a serious crime, but one of the easiest ways to protect yourself is to make sure that your employees know that you are regularly reviewing all the financial information and will require backup documentation for all purchases and reimbursements. Having an outside bookkeeper is also a good idea because it is always a good idea to have a second set of eyes to review things.