Use this space to highlight special info.

The Ultimate Checklist for Protecting Your Organization from Embezzlement

Implement Checks and Balances for Transparency & Accountability

Bernie Madoff: embezzler, thief and downright cheat. It is now common knowledge how the once trusted and revered Wall Street investment advisor scammed his investors out of at least $50 billion, proving that a friendly face can actually be the face of fraud. While his lies quickly unraveled to reveal one of the most infamous Ponzi schemes in history, people were thankful that it was not happening to them.

Can this Happen at Your Start-Up? If You’re Not Careful, Absolutely!

Scammers and cheats thrive on Wall Street; but these perpetrators also coerce and connive investors right here in Silicon Valley. Past clients have engaged Ravix Group to investigate possible embezzlement. One of the cases led to the arrest of the guilty party, proving that misappropriation happens more often than we think. Employee theft can be embarrassing, and worse, it drains the much-needed funds of a start-up company.

Companies such as the Ravix Group, provide trustworthy outsourced accounting services in San Francisco. An outsourced Controller or fractional CFO can provide independent oversight and help you develop essential checks and balances against theft and fraud.

How Can You Prevent Such Losses?

Start by reviewing your hiring practices. Criminal and civil background checks should be performed for all hires, particularly those who work in accounting. If the aforementioned client had taken this precaution, he would have discovered the perpetrator had a long rap sheet and been forewarned of his illegal activities.

Best Practices to Prevent Embezzlement

Here are best practices that can help you prevent fraud and embezzlement on your watch:

Purchase employee dishonesty insurance. Some property insurance policies include a small amount for employment dishonesty, usually ranging from $25,000 to $100,000, but you need to confirm with your insurance broker if your policy contains this. If not, employee dishonesty insurance is usually very inexpensive.
Require two signatures on checks and wire transfers for large disbursements. Multiple signatures diminish the likelihood of collusion.
Deposit payment receipts in a lockbox. If your company is already in the revenue earning stage, this step can ensure that the checks do not pass through the hands of an employee. If a lockbox is not an option, an independent person such as a fractional accountant should review accounts receivable monthly and investigate any bad debt write-offs.
Limit signing authority to executive officers of the company. As experienced professionals, we discourage companies from authorizing their office manager to have any kind of signing authority over cash.
Ensure that bank statements are reconciled and reviewed each month. This should be done by a person who does not have cash receipt or cash disbursement access.
Require employees to take a vacation at least once a year. In a situation with one client, the former bookkeeper never took vacation. She came into work early, left late and always kept the records locked in a drawer, inaccessible to even the company’s president. It was skilled embezzlement in the guise of dedication!

Do You Suspect Embezzlement at Your Company? Here’s How to Get Help

If you suspect embezzlement at your organization and your local law enforcement is not giving the case due attention, contact the Federal Secret Service. TRIVIA: This agency was initially created to investigate counterfeiting, not to protect the President!

Why opt for fractional accounting services for your business? With the right leadership, you can encourage clients and colleagues to follow these guidelines, to evade potential embezzlement and promote employee trust. By utilizing straightforward techniques and with help from our seasoned consultants, the Bernie Madoffs of the world can ultimately be avoided.

Among the best outsourced accounting companies, the Ravix Group provides honest, qualified fractional CFOs who leads by example. Contact us online or call us at 408 216 0656 today for a free consultation.