Business fraud and
embezzlement involves deceiving an employer by misappropriation of
funds. It is usually a premeditated crime, sometimes performed through
ingenious methods and other times concealed very sloppily. Quite often
someone in the accounting/finance department is the crook.
Commit the Crime?
triangle" is a model explaining three factors that lead to an
employee committing fraud: pressure, perceived opportunity, and
rationalization. Financial pressures (e.g., out of control expenses,
expensive tastes, divorce, etc.) can be a tipping point in stealing
cash or falsifying financial statements. The "opportunity"
arises when the employee realizes he/she uses a position of trust to
commit fraud, usually with a low risk of getting caught. The
perpetrator then "rationalizes" the act by feeling underpaid
or underappreciated, or the employer doesn't really need the money,
In this recent
was brought in because the business owner suspected something was wrong
with cash flow. He knew the company was making money but the bank
account perpetually seemed to be empty. Eventually, the office manager
was suspected of having something to do with it.
In terms of
responsibilties, the office manager was in charge of payroll and was
fully entrusted with running it. The owner never looked at anything
besides the end result. This allowed the office manager to exaggerate
her hours and overtime, fabricate non-existent "ghost"
employees, and steal hundreds of thousands of dollars.
MyCFO quickly identified the embezzlement, documented the
crime, and provided information for criminal prosecution and civil
Scope of Fraud Investigation
and embezzlement investigation engagements can involve a number of
investigative techniques, including:
payroll lists and personnel files for current/former employees
(including start and termination dates)
withholding and benefit deductions
schemes that move through third parties
processed checks, payments, and direct deposits
inconsistencies in pricing on invoices
electronic transfers and payments
documentation supporting disbursements
If you suspect fraud
and embezzlement in your workplace, contact