What is embezzlement? 

It is generally described as the intentional misuse or misappropriation of funds or property entrusted to an employee. In most cases an employee steals money or property from their employer. 

If I’ve discovered an embezzlement, who should I call? 

Call the police non-emergency number (503) 823-3333 in Portland) to report the theft. You should report the crime in the jurisdiction of occurrence.  Have spreadsheets, copies of checks (front and back) and other financial documents ready for the officer who is taking the report.  Be sure to request the officer come to your business location to take the report, do not report embezzlements over the phone. 

Will the police investigation serve to discover all of the financial losses?

Police  will investigate the crime, but we are not certified public accountants (CPA’s).  You may require the services of a forensic accountant. You should contact an accountant or you may wish to obtain a referral from the Association of Certified Fraud Examiners at

http://www.acfe.com/home.asp . You may have to initiate civil action against the suspect to obtain a monetary judgment.

Where can I get help for properly setting up or improving my business procedures? 

You may wish to contact a qualified business consultant, or a Certified Public Accountant.  You can get additional information on business from the Better Business Bureau, Http://www/bbb/org or Http://www.oregon.gov   whichserves Oregon businesses, or the Service Corps of Retired Executives, at their web site, http://www.scorepdx.org/brc.htm . There are other providers of information and services available.

Preventive Measures

The following information is a starting place for basic prevention.  While this is not a forum to address all the potential areas prone to embezzlement, we hope the material will bring the topic to prominent attention.

Require financial oversight

• Talk to a CPA or business consultant to learn about the weak points of your business procedures. Determine the level of oversight needed to secure you finances and inventory.
• Provide clear direction for employees with access to financial activity. Use acceptable procedures, practices, and limits. Establish a procedure for regular reviews and reconciliation of your business financial accounts and inventories.
• Business Plan
• Your business plan should include the level of authority and duties for your bookkeepers or cashiers (you should do this for all employees).  Discuss with appropriate employees.
• Have each employee indicate their understanding by signing and dating the description of duties and responsibilities.
• Share your ethical sense with your employees.  If your employees understand your business plan, it may help them to reflect the company ethics as they participate in growing and safeguarding your business.
• Inform your employees that you will vigorously prosecute all internal thefts.

Insurance Coverage

• Once your policies and procedures have been analyzed, does your business insurance provide the coverage you want/need? Does you business have an employee dishonesty policy.
• Employee Background
• Key positions may require a background check.  Your business consultant may suggest you start by requesting a release for any record checks that you may require.

Detection of Fraud

• The following is a list of routine tips for detection of fraud in an office setting. Be sure to check with a business consultant or qualified CPA for additional suggestions.
• Is there a lack of segregation of duties?
• Is there a sudden, unexplained change in business profits (shifting cash position)?
• Is a key employee experiencing financial problems?
• Do you find accounting irregularities in your business?
• Do you have internal control weaknesses?
• Does an employee have an extravagant lifestyle?
• Does a key employee have addictions?
• Are there anomalies or discrepancies in product returns, inventory, or purchases?
• Don’t be complacent if something seems wrong - Investigate!
• If you determine that you have been a victim, organize your evidence and notify the police.