Pub. 3 2013 Issue 3

11 People are most likely to embezzle when their ethics are sketchy, they’ve rationalized what they are doing, and they have an opportunity to get away with it. Our 10-step informational guide makes switching your DMS easy A Dealership Management System Designed By Car People, For Car People™ @AutoMateDMS (877) 340–2677 Visit automate.com to download our FREE eBooks to help guide you through the DMS decision making and data conversion process Think changing your DMS vendor is hard? high goals can make people desperate. If most of the compensation for management comes from incentives, like bonuses, you’ve just increased the odds of getting embezzled. • If you have to act, be quick about it. What should you be looking for? • Employees who seem like candidates for embezzling. If a spouse loses a job, for example, or you know an employee has to pay a lot of medical bills, you should pay attention to that. Pay attention, too, to employees who gamble. Does someone act as though you don’t deserve what you earn, or seem to feel entitled to financial equalization? Does someone spend an inordinate amount of time at work — including evenings and weekends — and never take vacations? Does an employee actively resent being checked, having other employees involved, or having an outside person examine the books? Does an employee spend more lavishly than seems reasonable given the financial circumstances? • The process doesn’t seem to be working. Customers complain that they’ve already paid; records are disorganized; there are duplicate payments, delayed bank deposits, altered checks and accounting records; profits are down, there are lots of outstanding checks, accounts receivables and payables don’t match; and the petty cash fund is smaller than it ought to be. • Look for disturbing patterns: one customer has either a lot of credits, or has unusually large credits; an employee and a vendor have the same address; one person has too many payments for it to be credible; past due accounts receivable has gone up. People are most likely to embezzle when their ethics are sketchy, they’ve rationalized what they are doing, and they have an opportunity to get away with it. Do your best to hire ethical people and shut down opportunity, and you will have done most of what you need to do. Q