How To Know if Your CFO Is Embezzling

Embezzlement is the theft or misappropriation of money or property by someone who is in a position of trust within a company, which is usually the Chief Financial Officer, or CFO. There are ways to know if your CFO is embezzling that will save your company money and reputation.

1. Look for a drop in profits. Gather your financial records from the previous years and compare them to the present records. If you notice a change in profits that do not conform to the trend of previous years’ profits, you can suspect embezzlement.
2. Notice changes in your CFO’s lifestyle. Look for an increase in the amount of money they normally carry, a sudden cessation of complaints of past due bills, or if they acquired new personal possessions that exceed their pay rate.
3. Notice if your CFO develops changes in work habits. A person who is embezzling usually refuses vacations, or routinely comes in early and stays late. They need to be in constant possession of the company books to avoid detection by someone who would step in while they are out.
4. Look for changes in the budget from year to year. Check to see if any account receives an unusual increase in its budget allotment. The CFO could be using that account to double process invoices and pocket the refund, or to collect payment for fake invoices for merchandise sent to multiple addresses or for merchandise that was never shipped.
5. Look for changes in your financial records. Changes to financial records could include erasure marks, crossed out information, and discrepancies in the total receipts from the actual invoices.
6. Check the credit card statements. If your CFO is embezzling, you will see unexplained, non-business related charges on the statement. You will also see charges that have no corresponding receipts.
7. Look for discrepancies in cash deposits. Total your cash receipts to verify that they match the bank deposit. The CFO could simply skim money out of the bank deposit and record the deposit in the books.
8. Notice if you have any missing checks. Get your bank statements and verify each processed check with the bank ledger. You will be able to see any checks that were processed but have no record of it in the bank ledger or the financial statements.
9. Pay attention to your employees and their interaction with the CFO. Notice if there is any strained dialogue or tension between them. Question them to see if they have any knowledge of theft within the company. Many instances of embezzlement could be caught early if employees are allowed to report any misappropriation with no fear of reprisal or retaliation.

Having a system of checks and balances and splitting the responsibilities amongst several people are very effective in discouraging embezzling.