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Companies Must Conduct Regular Financial Audits

A bookkeeper for a Colorado financial company was arrested at her home in Jefferson County last Friday for investigation of embezzling $760,000 from a Boulder financial company, starting just two months after she began working for the company in 2006.
Another accountant, who was filling in for the regular accountant while she was off work, discovered that large money transfers were being made into two personal bank accounts. The company then had an audit conducted and notified police of the suspected embezzlement.
This type of employee defalcation seems to happen with regularity, not only in Colorado, of course, but also in states across the nation. The most common cause in these thefts of an employer’s funds most often is the lack of regular audits, both internal and external.
All the glowing references in the world for a new bookkeeper or accountant and all the trust that a company develops for that employee should never take the place of regular audits. In addition, employee defalcation insurance -commonly called fidelity bonds–are a must. This type of insurance recognizes that even trusted employees have been know to steal, in which event the employer is reimbursed for the loss by the insurance company.
All businesses should institute basic guidelines to help prevent or minimize employee dishonesty. These guidelines should include at a minimum such steps as making sure that an employee who receives money on behalf of the business is not the same employee who makes the bookkeeping entry for that same money. Another safeguard is seeing that a duplicate of deposit slips prepared by one employee are kept and then compared by a different employee with bank receipts, to ensure that deposit slips are not altered on the way to the bank.
Large business corporations mostly are well aware of how to protect themselves against employee embezzlements. Sometimes, however, medium and smaller businesses tend to be more lax in employee oversight and make themselves vulnerable to financial losses from employee theft.

Boulder Charity’s Funds Allegedly Embezzled by Bookkeeper,” Colorado Business Litigation Lawyer Blog, posted 01/25/11
Colorado Victim Advocate Accused of Victimizing Victims,” Colorado Business Litigation Lawyer Blog, posted 10/19/10