March 25, 2011
Preventing Embezzlement: Steps to Take
In law firms, corporations, and nonprofits, embezzlement seems to take place with surprising frequency. On the Legal Intelligencer blog (March 23), Joseph Barbagello suggests steps to take to reduce the possibility of internal fraud:
- Employing solid anti-fraud measures, including separations of various accounting duties, and physical safeguards;
- Requiring dual signatures on all large checks;
- Conducting reconciliations of escrow accounts to subsidiary ledgers;
- Educating management and employees by implementing an anti-fraud training program;
- Implementing an anonymous and confidential fraud reporting mechanism;
- Conducting random fraud audits in addition to regularly scheduled fraud audits;
- Implementing a process for oversight of fraud risks via a governance or audit committee; and
- Implementing HR background checks (when permitted by law) that include past employment verification, criminal and civil background checks, credit checks, drug screening, education verification and reference checks.
I would add: Keep an eye on people who don't take vacations. They may be afraid that in their absence, someone will look at their records and discover misdeeds.
March 25, 2011 | Permalink