Lack of AP audits, division of duties heightens small companies’ embezzlement risk

The 2011 Marquet Report on Embezzlement, which was released last month, offered insight into misappropriation of funds across the country.

California had the greatest number of cases involving embezzlement over $100,000 (63), while New York sustained the largest estimated overall loss ($48.9 million), the Idaho Statesman reports. New York also topped the chart in terms of highest average loss per case ($2.4 million).

However, when analysts from Massachusetts-based Marquet International examined embezzlement losses in comparison to the size of state economies, some surprising names came up. For instance, Idaho was No. 7 in the country in terms of risk, while Vermont came out on top.

"I think Idaho has a similar issue – Vermont has a lot of small, family-run businesses," Marquet International CEO Chris Marquet said, as quoted by the news source. "Typically, they have very little infrastructure or controls."

Small companies often don't carry out accounts payable audits on a regular basis, and separating duties between employees isn't an option if only one person handles the books.

"Bottom line, it’s a control and audit issue," Marquet said, as quoted by the news source. "You need to audit and check the checks."

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