Have you been hit by embezzlement? It’s more frequent than you might think.

I live in a small town in Northern Michigan — but a popular tourist destination. We do have a few packaging companies in the area, and they range from small to large companies.

In the news recently, an article explained that a director of operations at one of these packaging companies had been audited for suspicion of embezzlement. The person expensed more than $170,000 in just three years — and siphoned just over $132,000 of those expenses into a personal account.

The company determined that the employee submitted fraudulent invoices for parts, services and travel. One of the work trips to China totaled almost $10,000 — a trip that didn’t exist. The article went on to explain that she offered to pay back the tens of thousands of dollars by setting up a payment plan.

The charges were brought by the prosecutor’s office, after an investigation by the Michigan State Police Department.

The employee at this company worked there only three years and was promoted to director after one year. So it got me thinking about how many employees this hurts, let alone the company overhead. How would the service manager, parts department, etc. determine this was happening? Do they see invoices?

This is something that those on the floor shouldn’t have to worry about; but when it is a loss of parts and service, it is a worry.

Should everyone have a stake in watching for situations like ordering a part and not getting it? Or tracking parts and services that weren’t needed, yet ordered. Should whomever is responsible follow up and ask why a part didn’t come in or a service was not scheduled? There has to be a link from the person putting in parts or service orders and the person responsible for writing invoices.

A few ideas to help prevent this from happening:

  • Perform audits at least yearly. This person embezzled funds over three years. If the company had an audit and found the fake invoices after one year, the loss would be much less.
  • Keep records electronically, not manually. Computed records are much easier to track.
  • A two- or three-person sign off on invoices before they even get onto an expense report.

It is worth looking into the checks and balances. It affects the entire company. Follow up if you are unsure, because in the end it is everyone’s job to keep things flowing.