Guidelines to Investigating Possible Embezzlement in an Organization


The losses organizations undergo due to embezzlement are high. Statistics show that the money that companies can recover is less than 40% of what they lose. Apart from losing money, fraud will damage a firm’s credibility and can make them miss opportunities in the future.

Most times, embezzlement in an organization happens for a prolonged period. With the correct information, it can be easy to detect the possibility of an embezzlement scheme and take action early. Here are guidelines to help with determining the signs of the fraudulent activities and how to handle the cases;

Know the Indicators

A company can prevent fraudulent activities if they know the indicators of embezzlement. It will help the firms seal loopholes and take action on the instigators. Whenever you detect unusual financial activities, you should want to know more. You can follow the transactions and financial records to ascertain the theory. Sometimes it can be challenging to identify activities, but you can have an auditor check the books of accounts.

Other indicators of probable embezzlement include an employee living beyond their means, workers preferring to work in isolation, failure to take time off work or working at odd times.

Avoid Assumptions, but Investigate

Assuming the person capable of embezzling funds from a company can bring complications at work or legal challenges. Therefore, do not confront any employee without undertaking enough investigations into the activities. Engaging a person without the evidence can jeopardize the case you would like to build. It will be impossible to prosecute and recover the money as the individual will take steps to cover their fraudulent actions.

Be Discreet

It might be tempting to talk about embezzlement cases with other workers, but it would be best to be discreet. Regardless of the employee’s service to the company or position, keep the investigations hidden. Only give minimal information depending on the circumstance or need.

Have a Plan

Embezzlement cases are complex and require planning to achieve the best results. You need to identify the funds likely to be lost and the techniques of embezzling the money. In addition, you should prevent further loss by revoking the suspect’s access to company resources. Alternatively, you can give the employees compulsory leave to pave the way for investigations.

Have a Checklist

It is vital to have an objective and timeline for the investigations. Create a checklist depending on the activity’s urgency to ensure you accomplish all you need for the investigation process and on time.

Collect Adequate Evidence

The financial records are definitive evidence for embezzlement cases. Collect the electronic and hardcopy records on transactions to act as evidence for the claims. It includes communication between the fraudsters that may support the case.

Seek Professional Help

Proving a person is guilty of embezzlement can be challenging. It is why you need expert help with the tasks. An accountant can help with the accounting records, while a lawyer can assist with prosecution. Consider professionals in the fields outside your organization to help with the investigations.

Create a report on the findings on probable embezzlement of funds. Also, take the necessary action to recover the money and protect the organization from the risks in the future.

Eric Lilly
the authorEric Lilly