NCJ Number
53596
Journal
Assets Protection Volume: 3 Issue: 3 Dated: (FALL 1978) Pages: 10-12
Date Published
1978
Length
3 pages
Annotation
EMPLOYEE THEFT AND WHITE-COLLAR CRIMES INVOLVING THE ACCOUNTING SYSTEM CONSTITUTE SERIOUS CRIMINAL THREATS TO A BUSINESS OR ORGANIZATION THAT MUST BE ADDRESSED BY SECURITY PERSONNEL.
Abstract
THE AMERICAN MANAGEMENT ASSOCIATION ESTIMATES BUSINESS CRIME LOSSES TO EXCEED $40 BILLION ANNUALLY, WITH EMPLOYEE THEFT AT THE TOP OF THE LIST. AS INCREASING RELIANCE IS PLACED ON AUTOMATED INFORMATION SYSTEMS AND HIGH TECHNOLOGY, BUSINESS LOSSES FREQUENTLY RESULT FROM WHITE-COLLAR OFFENSES AS OPPOSED TO OFFENSES COMMITTED BY BLUE COLLAR WORKERS. SECURITY PERSONNEL, IN DEALING WITH SOPHISTICATED TYPES OF EMPLOYEE THEFT, MUST WORK WITH CORPORATE ACCOUNTANTS AND AUDITORS TO ESTABLISH SYSTEMS OF INTERNAL CONTROL AND TO CONDUCT INVESTIGATIONS OF SUSPECTED DEFALCATIONS. TERMS RELEVANT TO THE DISCUSSION OF FRAUD, AS DEFINED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, ARE TRANSACTIONS, AUTHORIZATIONS OF TRANSACTIONS, EXECUTION OF TRANSACTIONS, RECORDING OF TRANSACTIONS, AND THE ACCOUNTABILITY FUNCTION. EACH STAGE OF THE ACCOUNTING PROCESS IS SUSCEPTIBLE TO MANIPULATION AND THEFT. HIGHER LEVELS OF MANAGEMENT HAVE GREATER ACCESS THAN LOWER LEVELS OF MANAGEMENT TO ACCOUNTING RECORDS AND ARE MORE SOPHISTICATED IN THE COMMISSION OF CRIME. A WELL-DESIGNED AND DOCUMENTED ACCOUNTING SYSTEM CAN SERVE AS A DETERRENT TO INTERNAL THEFT AND FRAUD. IN THE DEVELOPMENT OF A LOSS PREVENTION PROGRAM, EACH STAGE OF THE ACCOUNTING PROCESS MUST BE REVIEWED TO DETERMINE ITS VULNERABILITY TO THEFT AND FRAUD. ACCOUNTING INTERNAL CONTROLS MUST INSURE THAT TRANSACTIONS ARE RECORDED ON SOURCE DOCUMENTS THAT ARE CONTROLLED AND ACCOUNTED FOR, INSURE THAT THEFT RESULTS IN DISCREPANCIES BETWEEN BOOK VALUES AND PHYSICAL INVENTORY COUNTS, MAKE CERTAIN THAT RESPONSIBILITY FOR LOSSES CAN BE IDENTIFIED, ASSURE THE TIMELY IDENTIFICATION OF LOSSES, SERVE AS A PSYCHOLOGICAL DETERRENT TO THEFT, AND INCREASE THE PROBABILITY OF DETECTION. RECOMMENDED READINGS ARE NOTED. (DEP)