Employee Theft, Part 1: It’s More Common Than You Realize
Two years ago, I was speaking at an optometric meeting in Dallas when an OD pulled me aside during the break to suggest that we include the topic of employee theft and embezzlement in future talks.
The doctor went on to tell me how one of his key staff members had embezzled approximately $100,000 from his practice over the course of several years.
The thief only got caught because the doctor happened to stay late one day to dispense glasses.
When asked for payment, the patient produced a cancelled check for an amount the doctor’s office computer showed as being unpaid.
The doctor did some research and ended up discovering several years’ worth of embezzlement.
He pressed charges and his former employee received a felony conviction along with jail time.
I Could Not Imagine My Staff Would EVER Steal From Me
I distinctly remember thinking to myself as I heard the story, "Poor guy! That would not have happened if your assistant was as honest and as sharp as mine."
Are you thinking the same thing right now?
Little did I know, at the very moment I was having that conversation, a highly trusted personal assistant was in the process of embezzling funds from me.
In my case, an assistant who paid many of my personal expenses was slyly using electronic transfers to pay some of her bills from my account.
How did I catch her? Routine audit. But, I was totally shocked to discover the fraud as I never suspected a thing.
Tight Controls At HMI And Red Tray
For the record, this did not happen at HMI because we have very tight controls on the money coming in and out of HMI and Red Tray with annual reviews by a CPA audit specialist.
We also have good internal controls and do spot checks. HMI and Red Tray are a well-managed organization with professional oversight.
Where I made my mistake was not applying the same control with my personal expenses.
Don’t Rely Too Much On Just One Person
Lesson learned. My mistake was putting too much responsibility in the hands of one person without enough oversight.
Why did I do it? She was very good at her job and I trusted her.
Honest by nature, it simply NEVER occurred to me that someone I liked and worked with so closely would steal from me in such a blatant fashion.
However, once the auditors figured out what to look for, the paper trail was very clear. Embezzlement had occurred!
Did I press charges? Yes. Unfortunately, the theft was too calculated, too long term and too large an amount to ignore.
Has This Happened To You?
I know this has happened to some of my readers. Please share your thoughts by taking a short, 60 second survey. Let me hear your story. Your answers will be completely anonymous.
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Regards,
Jerry Hayes, OD
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Disclaimer: The information and opinions contained on this site are for discussion purposes only and are NOT intended to serve as legal, accounting or investment advice. ©2010 Jerry Hayes, OD. Not to be reproduced without written permission of the author.
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Audits are usually performed
Audits are usually performed by CPA's. Most firms will have an audit specialist.
No, most victims - including me - don't suspect a thing. That's how and why the perpetrator can get away with it.
who can do audits?
This was an email I received from a reader today.
Hi Dr. Hayes,
I read your blog on employee theft and am wondering what type of person could do an audit?
I don't really suspect anything, but according to those statistics many of us don't....now that's a bit alarming.
If your numbers are correct, some of us that think they have honest employees are quite obviously very wrong! I am feeling like I'd like to do some checking but don't know who to hire.