Embezzlement

The key feature is that the offender first obtains the assets lawfully. A cashier, bookkeeper, trustee or director is given control of funds, and later converts them to their own use. That separates it from ordinary theft, where the thief never had legitimate possession. Methods include small repeated skimming, false payments to fictitious payees, altering records to hide shortfalls and delaying deposits. It is often found where one person controls both handling and record keeping. It can continue for years because the person who steals is also the one who reports. Controls include segregation of duties, surprise audits, mandatory leave and independent reconciliation. Auditors look first at who both handles the money and writes it down, since that overlap is where this offence tends to hide.

The treasurer of a local sports club is the only person who handles cash and the bank statements. Over three years she writes small cheques to herself and records them as equipment purchases. The new auditor asks for receipts for the equipment, none can be produced, and a count of the assets shows they do not exist. The club reports the matter to the police.