Staff Writer
Cases of embezzlement have appeared in the news more frequently the last few months as people in trusted positions improperly stepped over the bottom line.
Small businesses and nonprofits have been experiencing the betrayal, and experts advise safeguards.
During tough economic times, organizations are forced to do more with less, and they may have smaller workforces performing more tasks.
The key safegurd, experts say, is never to trust one person to handle the finances.
“Businesses should never give employees ‘carte blanche’ to handle the finances of the organization,” said Steve Bledsoe, director of the Special Prosecution and Assault Divisions of the State Attorney’s Office.
“Businesses who don’t monitor the work of an employee responsible for an entire aspect of a business, down the road they find that the person has taken advantage of that access. Every company needs checks and balances,” he said.
Bledsoe explained that the problem can be avoided by periodically, at least monthly, auditing financial records and keeping track of checks.
“Smaller companies really surprise me,” said Bledsoe. “They can miss $40,000 to $50,000 and they don’t normally find out until they either change accountants or the accountant goes on vacation.”
Bledsoe has witnessed the trust that develops in smaller businesses. With staffs of four to 10 people, businesses can develop a family atmosphere where employers and employees become more friendly than they would in corporations employing thousands.
Becoming familiar with employees can help employers spot trouble signs, says Matthew Edelman, a CPA with the Jacksonville office of Dixon Hughes. Those signs could be changes in lifestyle, such as living beyond one’s means, or substance abuse.
“What I’ve seen over the years is you have a trusted employee who has access to money in an account and comes up with a way to benefit from that situation,” said Edelman, who has 35 years of accounting experience.
“It is normally a trusted bookkeeper who the owner trusts implicitly. Then that person gets in a bind and needs some money,” he said.
Among recent cases, Joan Nesbitt Eller, 62, pleaded guilty in December to embezzling more than $100,000 from the Timuquana Village Condominium Association over seven years. She managed the association for more than 20 years.
Then an organization created to provide aid to crime victims became a victim itself. Justice Coalition office manager and bookkeeper, Terri Adams Johnson, 42, was arrested Feb. 27 for grand theft. A review of Duval County Clerk of Court records reveals that this wasn’t Johnson’s first trip to the Duval County Courthouse.
“One of the main things that I stress is screening employees,” said Bledsoe. “In a lot of cases, employers didn’t know their employees had criminal backgrounds.”
The Jacksonville Sheriff’s Office will perform a local background check for $5 per name and the Florida Department of Law Enforcement can provide a statewide search for $23. There also are private services.
Once the employee is properly screened, their responsibilities should receive the same amount of due diligence.
“One rule I tell all business owners is that the bank statement ought to come to someone other than the person who reconciles the bank account on a regular basis,” said Edelman.
“It should come to the owner on a regular, if not daily, basis. It’s a lot better to ask and inquire to get an answer a month after the transaction has occurred rather than 12 months down the road.”
Employees also should safeguard their computer access.
“Employers should have employees change their passwords regularly,” said Assistant State Attorney Joe Licandro. “This prevents one employee from gaining access to accounts with another employee’s password, which could make it difficult to tell who is actually stealing from the company.”
Tips to help avoid being a victim of embezzlement
• Related duties should be assigned to different people. Have a system of checks and balances. Have more than one person sign off on company payments.
• Scrutinize bank statements and reconcile bank statements every month.
• Look at original documents before signing checks or authorizing payment.
• Lock down and check blank checks and signature stamps.
• Secure fidelity bonds and insurance for all accounting and key personnel.
• Know your employees, watch for changes in behavior. Look for trouble signs, such as changes in lifestyle or substance abuse.
• Make sure employees take vacations so they don’t maintain full-time control of any organization business.
• Change computer passwords regularly.
• Perform thorough background checks before hiring any employee. The Jacksonville Sheriff’s Office can provide local history, and Florida Department of Law Enforcement can provide statewide history.
Source: Matthew Edelman, CPA; State Attorney’s Office
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