This week I received two calls informing me of embezzlement by two trusted CFO’s, one from a charity I contribute to and the other a private company.  No organization is immune, but there are always some simple principles you can follow to make misappropriation of money harder for someone with an evil inclination.  Here are three not-necessarily-obvious checks everyone can perform:

1.      Can one person easily create and consummate a transaction without anyone else’s review or approval?  This is by far the characteristic most common to these crimes.  No matter how small the organization, and no matter how dependent on one person the organization is, small control steps can be implemented to mitigate much of the risk.

2.      Avoid the “it can’t happen here” attitude.  Even if you are convinced of it, consider that the procedures for insuring accuracy of accounting overlap with controls for avoiding theft, so implementing new steps to avoid innocent mistakes can cover both risks.

3.      Are there any key accounting employees who seem “never” to take a real vacation?  This is a classical tip-off for someone who doesn’t want anyone else to ever see what they are doing.

Naturally, the larger and more complex an organization is, the more fertile the ground for illegitimate behavior, but also the more opportunity for implementing effective controls easily.

NPA Consultants are specialists in Policies, Procedures and Controls. We perform inexpensive assessments for organizations from $1M to $100M in revenue. We are also happy to answer any questions. Contact us at info@NPAccountants.com or 617 694 4600.