4 Steps To Protect From Being Embezzled

It was falling revenues with the recession that led Colorado Welding Supply to declare bankruptcy in 2010. But as mother and son owners Jo and Eric Younger discovered, there may have been more to the story than a floundering economy.

A May 10, 2012, article in The Gazette reports that the Colorado Springs, Colorado, business was the victim of employee embezzlement. The distributor’s bookkeeper, a woman named Christina Michele Bratcher, pleaded guilty to embezzling almost $500,000 from the business.

Embezzlement CheckThe Youngers were readying the business for a fire sale when they discovered that Bratcher had forged Eric Younger’s name on more than 200 business checks to fund an online gambling habit and other personal expenses. The bookkeeper had been with the company since 2005 and was hired on the recommendation of a friend.

Bratcher’s fate is all but sealed, as she faces up to 12 years in prison for her crimes. Whether the Youngers and their business will survive the losses from her embezzlement is yet to be seen.

This is a harsh reality, and the truth is that embezzlement can happen to just about anyone. In an article in Welding & Gases Today,  Edward J. McMillan, a CPA with McMillan & Associates in Lothian, Maryland, describes  steps that a business can take to protect itself from embezzlement. “It is human nature to place individuals who appear to be loyal and trustworthy in positions of trust,” he says. “Yet to safeguard itself, the company must reduce the opportunity for employee dishonesty.”

MacMillan outlines the following steps any company can take to thwart fraud:

  • Always require two signatures on checks. “The more individuals involved with processing a check for payment, the less likely an embezzlement will occur, because collusion would be necessary,” says McMillan.
  • Never hand write the check amount. “It is too easy to tamper with handwritten checks,” warns McMillan. “Always use a check imprinting machine or computer-protected checks, or type the amounts if necessary.”
  • Do not have bank statements sent directly to accounting. All bank statements, but particularly the checking account statement, should be sent directly to the chief executive officer.
  • Conduct an annual audit. “While accurate financial statements are obviously important, the internal control review conducted as part of an annual audit by an independent CPA firm is the only way a company can be assured that cash and other business assets are protected,” he says.

To view additional measures you can take to protect your company, read McMillan’s article “Is Your Company Ripe For Embezzlement?” in Welding & Gases Today Online.

Gases and Welding Distributors Association