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 are rather large companies.
In the news today, 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 — for travel, parts and services for the company. The employee siphoned just over $132,000 of the expenses into a personal account.
The company determined that the employee submitted fraudulent invoices for parts, services and travel. Just one of the work trips totaled almost $10,000 — to China — a trip that didn't exist. The news went on to say 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 of how many employees this hurts, let alone the company overhead. How would the service manager, parts department, engineers ever determine this was happening? Do they see invoices?
This is something that workers on the floor shouldn’t have to worry about; but when it hits as a loss of parts and service it is a worry.
Should everyone have a stake in watching for situations like ordering a part and never getting it? Or worse, how to track parts and services that weren't needed, yet ordered. Should the floor manager (or whomever is responsible) follow up and ask why a part didn’t come in or a service was not scheduled — or is that overkill? There has to be a link to the floor and someone responsible for overseeing invoices.
If this can happen on this lower scale, imagine what could be happening at larger facilities. Procedures need to be in place to prevent this from happening, and I’m sure they are. However, a lackadaisical position of letting things go, such as with approving expenses and not asking questions or following up, can easily happen when we are so busy.
The point is everyone is busy. And it’s up to each of us to do our job, and do it to the best of our ability. Those on the floor should not be responsible for being watchdogs … but is it necessary? Obviously, the accountability falls on the shoulders of the person who committed the crime.
One idea is to perform audits at least yearly. This person embezzled funds over three years. If the company had audited and found the fake invoices after one year, the loss would be much less. Another thought is to keep records electronically not manually. Computed records are much easier to track. And one more: Perhaps a two- or even three-person sign off on invoices before they even get to an expense report, and for the expenses themselves.
The fallout has a trickle-down effect that potentially prevents a new part for a printer, a service call on a conveyor. It is worth looking into the checks and balances. It not only hurts the person who committed the crime but the entire company. If you work with the machinery or materials responsible for packaging products and keeping it all on a proper schedule, it is prudent to make sure a part ordered comes in. Follow up if you're unsure, because in the end it is partly your job to keep things flowing.