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  • Writer's pictureRobert Reed

All You Need to Know About Misappropriation of Assets in Business

Employees are expected to only use company property and assets appropriately and within the scope of their employment. Unfortunately, this is not always the case as many employees have been caught misusing company assets for their own personal benefit. While many smaller infractions like using company stamps to send personal mail or taking home a box of staples may seem like “no big deal,” even the smallest misuse of company property is ill-advised and could be considered theft. When employees choose to misappropriate business funds, falsify hours worked to skim cash, or take cash out of the cash drawer, it can seriously affect a business’s bottom line. Some of the biggest losses a company can experience via the misuse of company assets involve upper management misusing large amounts of company funds for personal use. This misuse of company assets can ruin a company’s reputation, become a serious liability for the business, and cause far reaching legal repercussions.

Why do employees misuse company assets in the first place?

When some employees misuse company assets, it can be completely unintentional. If working for a small business, an owner or manager may not have the time or expertise needed to keep accurate records and therefore some personal expenses could get mixed up with the business accounts. Not all mistakes, though, are innocent as there are some managers who feel as though they deserve more pay or a bigger bonus and will take what they want from the company without asking. They will then falsify records to hide this activity. These types of illegal transactions are considered tax evasion by the IRS and a complete misuse of company funds.

Many employees simply need more money to support their families, a gambling addiction, drug or alcohol addiction, unexpected medical costs, or investments gone wrong. This motivation makes it easier for an employee to rationalize taking assets from a company for personal use and hiding their illicit activities. Even if an employee only plans on misusing company assets temporarily to get them out of a bad situation, it is still theft and harms the company as a whole.

How can I prevent the misuse of company assets?

As a company, it is essential to set up a system of checks and balances that involves multiple levels of safeguarding. One individual should not be the only person in the company to keep records, check emails, handle payments, and keep track of supplies. This easily gives that person the opportunity to commit fraud without anyone knowing. Forming a proper system of accountability will reduce the risk of fraud from occurring as multiple people will be responsible for ensuring records are accurate.

Developing an appropriate employee monitoring system will also help prevent fraud. This does not mean constantly watching your employees over their shoulders but it does mean that you should check in with employees regularly to see if there are any suspicious changes in behavior. To prevent fraud online, ensure you have appropriate site blockers enabled on your company’s network to ensure employees are not visiting non-work-related websites that could encourage the misuse of company funds.

What can I do if I find out an employee is misusing company assets?

It can be absolutely devastating to find out that a trusted employee has misused company assets and has put their own personal interests ahead of the company’s. Statistics has found that businesses should expect to lose an average of five percent of their gross revenues to internal fraudulent misconduct behavior. Once you find out that an employee is stealing from the company, be it through embezzlement, falsifying records, or stealing money from the cash drawer, it is critical that you hire a investigative consultant or private investigator to help deal with and mitigate these losses. Private Investigators can help you investigate what occurred and assist with evidence and testimony when a lawsuit is filed against the party that misused company assets.


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