Prevent Internal Theft By Limiting The Opportunities To Skim Cash

The Mississippi state auditor's office arrested the Alcorn County Tax Collector recently, charging him with embezzlement and fraud.

The State Auditor also issued a demand letter, claiming the former tax official owes $69,155.23 to Alcorn County taxpayers. The amount includes interest and investigative expenses. The arrest followed a grand jury indictment of the county tax collector on two counts of embezzlement and one count of making a fraudulent statement to a local grand jury.

Authorities say the embezzlement came from the sale of car tags. The tax collector took the cash the county obtained by recycling unused vehicle license tags. He is also accused of pocketing official fees when people paid in cash. Investigators also found evidence the defendant created and signed fraudulent bills of sale as the tax collector. From March 2012 through March 2020, the defendant purportedly embezzled $2,689.58 from Alcorn County.

In addition to the criminal findings, the former employee is allegedly responsible for losses to the county in the amounts of $43,746.48 and $5,478.81 through waiving late penalties associated with the licensing and registration of motor vehicles. If convicted, he faces up to 45 years in prison and $20,000 in fines. "Alcorn County Tax Collector charged with embezzlement and fraud" www.journalinc.com (Dec. 21, 2020).

Commentary

The National White Collar Crime Center estimates that employee theft and embezzlement cost businesses and organizations $400 billion per year. The FBI Financial Crimes Report to the Public estimates that financial crimes account for between 30 and 50 percent of all business failures.

The Association of Certified Fraud Examiners cites three types of cash theft: skimming, cash larceny, and fraudulent disbursements. Skimming and cash larceny involve the theft of cash flowing into the business. Fraudulent disbursements involve the theft of cash flowing out of the business in the form of payments.

Skimming refers to the theft of cash that has not yet entered the employer's accounting system, such as when a person makes a purchase or pays a bill using cash, but an employee pockets the money and never rings up the purchase. Cash larceny means stealing cash that has already been recorded on the employer's books. Larceny is more difficult to conceal than skimming because the stolen funds have been recorded in the employer's accounting system.

One way to prevent skimming is to stop accepting cash, opting for accepting credit or debit cards only. Shrinking inventory can be a sign that your workers are skimming cash. Install cameras near your cash registers, as workers are less likely to steal when they know their actions are being recorded.

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