An Embezzling Employee – Oh No!

The legal nurse consultant stared at her credit card statement in shock. “Could I have an embezzling employee?” The LNC’s bookkeeper was on vacation when the owner opened up the credit card statement. Her bookkeeper always insisted on paying the bills; the LNC trusted her and did not double check.

“There is a $3000 computer charged to this card. I did not order a new machine!” The LNC realized the employee ordered the machine for her personal use, but on the company credit card. The LNC would ordinarily never have seen that charge because she trusted her so completely and there it was.

When An Embezzling Employee is at work

No one wants to think a trusted employee is stealing. What happens is a bookkeeper will gain your trust. It may start with a small expense like that and it might be something that you would not notice at all. Maybe she went to the office supply store and bought supplies for herself and you would not have realized of course that they weren’t for your business.

The embezzling employee sneaks in a few little ones and then starts getting more aggressive, and braver.

You may see these warning signs:

• Signs of an employee with an increased need for money, such as the purchase of a house, a drug or gambling problem, a new needy relative
• An overprotective employee who is so dedicated she never takes vacation or sick time – because there is a chance you’ll find the theft
• A customer who insists an invoice was paid when your records show it was not
• Checks being written to vendors who have the same address as the employee
• An employee whose standard of living has suddenly increased and not in line with what you are paying him
• There are unusual patterns in your finances: the number of incoming checks decrease, there are duplicate payments, missing documents, disorganized records and more
• Your accounts payable and receivable don’t balance

I had a rule in my legal nurse consulting company that only my husband and I had signing authority for our checks. We had one employee open the mail and pull out checks and bills, and another employee who was responsible for paying those bills. We didn’t have handling of the mail concentrated in one set of hands. Our accountant and my husband were both involved in checking the books so that my accountant was the one who did the bank reconciliation, not the person who was creating the invoices.

Anytime you have one person doing it all there are more opportunities for them to get their fingers in there and do something that they’re not supposed to do. My husband was obviously a trusted person. It is great if a spouse is involved in your business.

My accountant had oversight and watched what occurred with the finances. My employees knew someone was watching so the chances are pretty high that they would get caught and that’s always a really good deterrent.

You suspect you have an embezzling employee

Contact a business and commercial law attorney for guidance. Don’t tip your hand and reveal to your employees that you suspect anything is wrong, and don’t change your bank account. Don’t meet with an attorney at your site of employment during working hours. The suspect employee is usually very watchful for any signs you suspect him or her and may disappear.

This is a difficult situation – financially and emotionally. You’re caught off guard. Get professional help from an attorney when you suspect an embezzling employee.

Ann Kaplan, CPA talks about this subject and others in our Legal Nurse Podcast, episode 14: How to Master the Art of Money Management. Check it out at this link.