Preventing Embezzlement: If You Make It Easy For People to Steal From You, They Will
Summary
The aim of this assignment is to review the article “Preventing embezzlement: if you make it easy for people to steal from you, they will” written by Frank. W. Abagnale. The KPMG conducted a survey of 1000 top international firms in the United States and asked them to give ranking to the issues that hurt their organization most. The survey revealed embezzlement as number one crime that hurt organizations most.
Background
The overall paper discusses the prevention measures from fraud and advises organization the ways that can be used to detect fraud. The focus of the paper is on embezzlement issues and preventive measures. Measures that have been suggested to organizations include internal audits and authentic hiring practices that keep organizations safe from people with fraudulent backgrounds. Some others are a separation of responsibilities, control over account payables, and restricted access to vendor master file, timely reconciliation, separation of responsibilities, and discarding void and canceled checks properly.
Analysis
In the article, the researcher mentioned the issue of embezzlement as a highly important problem that causes to give huge losses to multiple organizations and has been ranked as number one in 10 years from number nineteen (Abagnale, 2008). The article discusses the diverse embezzlement issues through discussing true stories and defines the solution to those issues and preventive measures that can be taken. The article suggests that for preventing organizations from thefts or misappropriation of funds, organizations should implement a system that can keep people with questionable backgrounds away. The article suggests that organizations should have proper control over incoming and outgoing checks. Therefore, companies should not provide access to employees to the master file record. The article shares a true story of an apparel market in which due uncontrolled check stocks, the market face huge losses. Therefore, the article suggests that organizations should keep tight control over checks, and canceled or void checks should be stamped immediately with a void or canceled. For the detection of check frauds, the article recommends timely reconciliation and to destroy obsolete checks as soon as possible. It has been realized that accounts payable and payroll are amongst the most vulnerable functions to embezzlement. Organizations are responsible for unauthorized payments that dishonest employees make. The article recommends that organization should conduct account payable audits for reducing exposure to fraud. Firms should not give access to employees to vendor master files. For having control over records, companies should take the review and should confirm changes from customers. Always mail the check to the vendor directly rather mailing to requesting party as it opens doors for fraud. The article defines that each person should be listed on his or her right of access and the level of access and divide the responsibilities so it will be easy to detect fraudulent activities.
Recommendations based on analysis
It has been determined that the author did not present any statistical data that can reveal that losses that occurred due to the specific issue of embezzlement. The article should have presented or clearly define the types of embezzlement and should have recommended the solutions according to the types of issues. The data of the losses associated with each type of risk embezzlement should have been taken, as it could help in defining the most critical type of fraud that causes loss to the organization. Through this way, the immediate attention to the particular issues could be given.
References
Abagnale, F. W. (2008). Preventing embezzlement: if you make it easy for people to steal from you, they will. Check Fraud and Identity Theft, 2, 12-13.
