Embezzle

Embezzlement is the act of withholding assets for the purpose of conversion (theft) of such assets, by one or more individuals to whom the assets were entrusted, either to be held or to be used for specific purposes. Embezzlement is a type of financial fraud.

Overview

Embezzlement typically involves the misappropriation of funds by a person who is in a position of trust or responsibility over those funds. This can occur in various settings, including corporations, government agencies, and non-profit organizations. The person committing the embezzlement is often an employee, manager, or executive who has access to the funds.

Methods

There are several methods by which embezzlement can be carried out:

• Skimming: Taking cash from receipts before they are recorded in the accounting system.
• Lapping: Using receipts from one customer to cover the theft of receipts from another.
• Check kiting: Writing checks from one account to another when there are insufficient funds in the first account.
• Payroll fraud: Creating fake employees or inflating hours worked to divert funds.

Legal Aspects

Embezzlement is considered a criminal offense and is punishable by law. The severity of the punishment often depends on the amount of money embezzled and the jurisdiction in which the crime was committed. Legal consequences can include fines, imprisonment, and restitution to the victims.

Prevention

Organizations can take several steps to prevent embezzlement:

• Implementing strong internal controls and audit procedures.
• Conducting thorough background checks on employees.
• Segregating duties so that no single employee has control over all aspects of financial transactions.
• Regularly reviewing financial statements and transactions for irregularities.

Notable Cases

Several high-profile cases of embezzlement have been reported over the years, involving significant sums of money and leading to severe legal consequences for the perpetrators.

Related Pages

• Fraud
• Theft
• White-collar crime
• Internal control
• Audit

See Also

• Financial crime
• Corporate governance
• Forensic accounting