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Use deterrence to avoid enabling employee theft: convicted embezzler

November 17, 2010
By Berry Webne, Webne Consulting Group

Editor’s note: The author will speak at an Oct. 12 CATA seminar about controlling employee theft. See the insert in the print edition of this publication.

 

When I committed my crime back in 1991 through 1994, I thought I was one in a million. No one in his right mind embezzles money from his employer. It just didn’t happen. 

That belief was only solidified when I entered federal prison and found that only about 2 percent of the inmates were white-collar criminals. I maintained that thought process until I had my first opportunity to speak publicly about my crime. In doing so, I’ve been able to do research and see just how rampant this crime is.

 

These types of crimes that continue to occur on a daily basis within our communities usually aren’t highly publicized. In most cases, business owners don’t want to admit that they’ve been a victim of this type of crime, let alone prosecute the perpetrator. Doing so would admit defeat and show weakness, and that would not look good in the eyes of potential customers, vendors and outsiders. 

As a business owner or executive, take a step back and put yourself in the position of your most "trusted" accounting person—your Accounting Manager, Chief Financial Officer or Controller. With our nation’s economy in its current situation; with gas prices near $3 a gallon; and with individuals living on credit cards, one paycheck away from financial collapse, it’s easy to see how individuals get themselves in financial predicaments.

 

Couple this individual financial pressure with a lack of internal controls within your business, like the Controller who issues Accounts Payable checks and reconciles the bank statement each month.  

It’s a recipe for disaster, and statistics have shown that at least 65 percent of the time, under the right circumstances and pressure, that individual, your trusted employee, will cross the line and commit fraud.

 

The fact remains that we can easily fix this problem. We’re never going to be able to control the perpetrator and his or her thoughts or actions, but we can control the opportunities for fraud that exist within our businesses and organizations.  

As business owners and executives, if we can first secure our own borders, close our internal control gaps and eliminate the opportunity for fraud, we can better protect ourselves and minimize the chance that one day we, too, will be victims.

 

Hands down, we are in complete control of our destinies as it pertains to employee theft and occupational fraud. We can continue to sit back, do nothing and play the odds.  

But chances are, if we continue to operate our businesses as we have in the past, one day we will become a victim, maybe to the tune of hundreds of thousands of dollars.

 

On the other hand, we can step up to the plate today, spend a small amount of money to change some of the things we do from a task and policies and procedures standpoint within our business or organization, and mitigate the chance of any future significant fraud damages.

 

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