Embezzlement can be a major embarrassment for a large firm or the kiss of death for a small business.

Embezzlement is the act of dishonestly appropriating company funds by the person who is trusted with the company funds, and the high frequency of these crimes is driving several business owners to search out ways to protect themselves from this form of internal theft.

Although the crime is common, incidents of internal theft are almost never brought into the public eye because the crime is seldom prosecuted. Many times the victim is too embarrassed to come forward and admit that they were the object of such a crime. Without exposure and prosecution, the criminal is left to pursue other employment and perhaps continue their nefarious ways at a new, unsuspecting business.

Employers can attempt to protect themselves from embezzlement by following a few recommendations.

One suggestion is to perform criminal and credit background checks on prospective employees. The background checks are especially important for positions that will be trusted with the company’s financial assets. The small cost of the preliminary background check may prevent a large loss from happening down the road.

Another recommendation is to force employees to take vacation. Most embezzlers work hard to cover up their activities and a few days off may reveal their wrongdoing.

Monitoring the company’s financial statements can also be a useful tool in combating embezzlement. Spikes in certain costs or other fluctuations may be a warning sign that something is not quite right.

Finally, prosecuting anyone found to be embezzling from the company will send a message to everyone that this type of activity is not acceptable at the organization.

Bankers and accountants can serve as allies in the battle against embezzlement. Banks can provide different defenses against internal theft such as lockboxes and vendor lists. A lockbox is a service offered by the bank in which the company receives payments by mail to a post office box. An employee of the bank picks up the checks from the lockbox and deposits the checks directly into the company’s account. The company has access to the funds in a timely fashion and the opportunity for an employee to steal the check has been removed. A company can also provide the bank with a list of approved vendors with instructions to never honor a check to a vendor that is not on the approved list.

External accountants can provide financial analysis that can detect fraud and embezzlement and possibly identify the perpetrator. Many accounting firms have programs specifically designed to recognize internal theft and misappropriation of funds. Employers can look to these business partners for help in protecting their assets and reputation.

Embezzlement is a common offense that violates a trust between employee and employer. While it is difficult to prevent embezzling in absolute terms, things can be done to decrease the likelihood of the crime. Awareness of the threat is the first step to preventing the theft.

Ronnie L. Williams is the director of finance for HealthChoice LLC.