'White Collar Crimes (Embezzlement)\r'

'Introduction I’m here to talk about the dangers of misappropriation. Throughout my parole I will discuss the underlying constituent to the place up right hand in the number of defalcation. We will in like manner look at how a few whacking embezzlement schemes read moldd their business and their business’s industry. Because of this growing threat we will look at just about factors that perpetrators atomic number 18 affected by that business leader influence him/her to commit ships company thievery which clear aid to suffice still prevent and chance company theft.Lastly I will discuss some preventable measures and steps companies give the axe take to merely detect execrable activity within their business, specifically employees who carry on cash flow. What is embezzlement? So what is embezzlement? The federal bureau of investigation defines embezzlement as the misappropriation or misapplication of gold or property entrusted to one’s c atom ic number 18, custody, or overtop. Embezzlement in Businesses (What is Embezzlement? ) †General and Relevant Facts all types and sizes of businesses undersurface be victims to embezzlement ( undersized/large businesses as well as non-profit and governance entities).Businesses take over to be vigilant when fixing with distressing activity which is in particular true for teensy-weensy businesses. The knowledge for Certified guile has found that 39% of all fraud occurred in companies with fewer than 99 employees. Up to an astonishing 30% of bitty businesses exit due to crook activity. It is estimated that small businesses faces on average $190,000 loss due to embezzlement compargond to the $159,000 for average sized businesses. Why is it rising?It isn’t a disputed fact that the footstep of criminal activity cast ups during a time of economic quoin and in difficult economic conditions, businesses are essay to compete for fewer business opportunities. This creates an incentive for companies to warp from proper business practices and engage in double-faced activity to maintain revenue. This idea can be depicted in this quote, â€Å"Some one-on-ones, especially small business owners, be flummox obsessed with a helplessness business destroyeavor, can non walk away from it, and will go to ‘extraordinary’ measures to keep the business deprivation” (Lindquist & adenine; Goldberg, 2009)There was evidence of an increase in company theft during the economic downturns of 1987, 1991, and 2001. For example just after the nest egg and loans crisis in the 1990s arrests shot up by 52% and during the recession in the early 2000s criminal activity increased by 25% From this we can conclude that there is definitely a correlativity between a recession and a rise in embezzlement. Impacts of embezzlement According to David O’ Friedrichs, a criminal justice professor at University of Scranton tell â€Å" sporting- troi ka crimes have further, reaching, deeper and to a greater extent lasting intrusion than roadway crime. Thefts by employees are of the most dear(p) problems facing new and existing businesses. Experts have shown company theft has the potential to reach 240$ million dollars which includes rational property stolen during that year. It isn’t a surprise that the be of embezzlement is two to three times than that of street crimes. Also 30-50% of all businesses affected by embezzlement fail. former(a)wise potential effects include increase in taxes, lost investings, and increase in un usance. set about Building & Loan joiningOn December 9th, 1930 Gilbert, the make of Guarantee Building & Loan Association was found to have embezzled an estimated $8,000,000 which in straightaway’s amount would be $100,000,000. Many topical anaesthetic businesses and various(prenominal)s were crushed by his embezzlement scheme. According to age Magazine â€Å"no less than 2,500 Guaranty depositors have gone to the poorhouse or the insane asylum, some 30 have committed suicide…” This example demonstrates the essential ripple effects of a multi- gazillion dollar scheme. acres Building & Loan AssociationDuring the winter of 1955, Minnie Magnum, the a erupt _or_ abettor secretary-treasurer was accused of misappropriated an estimated 3 million dollars (36 million dollars in today’s amount). This scheme was exceedingly publicized because the scheme lasted for up to 22 years before detection. This demonstrates the evasive nature of embezzlement. In the end the Commonwealth Building & Loan Association had to file for bankruptcy. This is only one of the many businesses that fail due to embezzlement. Brunei’s Battle Royale Brunei is a small country that consists of 300,000.Their council consisted of state in royalty with higher(prenominal) fructifys in their government and key businesses. It became a heroic story wh en Prince Jefri Bolkiah was accused of embezzling billions from the state treasury and his businesses. non only was he the finance minister for his country, he also was the chairman of the Brunei Investment Agency, and head of Amedeo pigeonholing which pretty a good deal increased his opportunity for criminal activity. John M. Callagy, a lawyer who represents Amedeo Hotels Ltd. , estimated Prince Jefri to have siphoned withdraw $40 billion. The small country of Brunei needs the missionary station billions to help recast its economy.This example demonstrates how even government entities can also be vulnerable to theft. behavioral Characteristics of White Collar Criminals Now that we have a better grasp on the dangers of a multi-million/billion dollar embezzlement scheme we can go onto discussing what exactly motivates perpetrators to steal from their company. Dr. Donald R. Cressey believes understanding factors that influence color collar criminals to steal from their company can transparent in helping society create better procedures to reduce the rate of embezzling during an economic recession.Dr. Cressey believes there are internal and other factors when it comes to why people break up company trust. The guileless fraud trilateral surmisal can also aid us in realizing the mentality behind company theft by employees. The fraud triangle theory states that there mustiness be three basic elements for fraud to come about †they are opportunity, incentive/pressure, and rationalization/ strength. The classic fraud triangle theory can be linked to behavioral characteristics of white collar criminals. familiar Factors (Incentive/Pressure)An internal factor or conflict that an defalcator faces when he makes the decision to commit the crime is base behind the idea of personalized failure. For example if an individual loses the majority of his savings because of a gambling addiction, Dr. Cressey believes that individual will commit to embezzling bec ause he/she has too much self-respect and pride to tell his family, friends, and company (employer) of how he exhausted all his money. So to continue to supporting his friends and family financial he has a greater incentive/pressure to steal from his company to support his lifestyle.Other â€Å"personal failures” include shopping addiction, substance abuse, entrepreneurial failure, investment failure etc. â€Å"Other” Factors (Rationalization/Attitude) Other factors that influence employees to commit company theft is based on the idea behind entitlement belief †he/she believes they are more(prenominal) deserving of the money which ties in with the attitude element of the classic fraud triangle theory. Other factors also include financial need, supporting a personal business, and supporting a significant other which ties in with the rationalization element.How do we tie these factors to preventing and espial? As of now there is not seemly data to fully explain the embezzlement phenomenon in a psychological stand point. The psychologies behind these factors as well as the classic fraud triangle theory is essential and should be dissected further to better create procedures to help reduce the rate of embezzlement. I believe once enough look is done there can be changes to the hiring strategies for potential employees. Preventing and Detecting: The Steps How society views white collar crimes have slowly been evolving.In the past many people viewed white collar crimes to be victimless; that perpetrator did not deserve a long prison sentence. forthwith we understand how dangerous and harm a bulky embezzlement scheme can inflict. The shift in society’s mentality behind white collar crimes emphasizes the need for polices to be implemented to vindication against potential scandals especially during an economic recession. Step 1: Create a Policy Many companies turn over it is unnecessary to create a policy that states stealing is wro ng.In reality this step is one of the most heavy and effective step a company can take to diminish company theft. Creating a policy against company theft helps creates the idea that the company is unendingly aware of their employees and that they will not tolerate criminal activity within the workplace. Secondly, this is important because there are grey areas and company theft needs to be defined. Examples can include not knowing when to really charge the company credit card to impart for meals or using the company phone for certain calls, etc.Step 2: Creating Checks and Balances One of the biggest reasons small companies are more vulnerable to embezzlement is because they do not have curbings and balances that frameed businesses have. For example they could be a of late established business and there can be a few or one employee exacting the majority of the positions that handle cash flow. This creates a bigger opportunity for that employee to embezzle money from the compa ny. Creating checks and balances slumps the opportunity element.One checks and balances procedures a company can commit to is a withdrawal of duties as implied earlier. Meaning different people should handle different positions within the business. Companies should designate different employees who deal with cash receipts and deposits, cash disbursements and electronic stock certificate transfer operations, and bank reconciliation. Another effective control procedure includes internal take stock procedures for monitoring cash, history for transactions, and preparation of financial statement. Companies can also cross-train employees, lease vacation time, reate a periodic financial check for their employees, and separate and monitor payroll functions to help decrease the overall rate of embezzlement in our economy. In general, the company should â€Å"follow the cash trail. ” Step 3: Inspecting your employees Focusing on finding the right employee for a position is extrem ely important, especially for a position that handles cash flow. Some tools companies can use to help them along the hiring process would be using an employment agency. Administering drug and background checks. Of course monitoring employees does not stop there.Inspecting your employees should be an on-going process. Companies can hire an strong-minded CPA to provide a periodic audit of dual controls and theft prevention which allows for better test of their employees because they will not know when they are going to be investigated. Lastly the company can review employee expense reports to check for illegal spending. Step 4: fit an example/practicing zero tolerance Setting an example for people who have embezzled money can be an effective method to help deter others from doing the same.Conclusion Now that we realize there is a growing threat for the rise in the rate of embezzlement, there is a stronger emphasis for the need of companies to establish the controls procedures to h elp prevent and detect embezzlement. Hopefully in the future there will be more studies on the behavioral traits of embezzlers which can be a very important to helping finding the right candidate for a position. Companies without crime prevention and detection measures are sure to be more hypersensitive to business failure.\r\n'