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What do you have under your coat? The statistic that will keep sleep out of the eyes of any employer - Walla! Of money

2022-06-20T09:05:40.485Z


One of the least talked about damages of the Corona period is embezzlement in funds. A global study that also includes Israel reveals enormous scope. So why exactly are the dedicated workers the suspects?


What do you have under your coat?

The figure that will keep sleep out of the eyes of any employer

One of the least talked about damages of the Corona period is embezzlement in funds.

A global study that also includes Israel reveals enormous scope.

So why exactly are dedicated workers the ones to keep an eye on, and what's the real gap between men and women (hint: really not what you thought)?

David Rosenthal

20/06/2022

Monday, 20 June 2022, 11:02

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Trailer for the "Embezzlement" series (yes)

"Stealing from your employer is the most despicable thing that can be done. Stealing from someone who brought you a livelihood to put food on the children's table. It's taking advantage of the trust placed in you, in the ugliest way possible, and that's exactly what happened to me: a dedicated worker, at least I thought, "For 15 years as a warehouse manager, he was caught on camera stealing a carton of meat worth 5,000 shekels. When we started doing engineering backwards, we realized that he started stealing from me a decade ago. If you add up all the pallets he stole, you reach over half a million shekels."



The words of Asher, owner of a slaughterhouse in the north of the country, describe a very common pattern of conduct, in which workers are elevated in the trust of their employer and steal money or goods from it.

The phenomenon is not new, but according to studies conducted, over the past two years, since the outbreak of the corona plague, there has been a steep increase in their prevalence.

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The most famous case in recent decades.

Etty Alon (Photo: Walla! NEWS system, Talia Kadosh)

How serious is the situation?

According to the biennial study of the World Bureau of embezzlement examiners - the most significant body in the world in the study of the subject, organizations around the world lose about 5% of their income per year due to embezzlement and financial irregularities in the organization.

The results of the study, first published in Walla Money, based on 2,110 fraud cases that occurred in 133 countries around the world (including Israel) during the period from January 2020 to September 2021, show that the global damage caused by fraud is estimated at $ 4.7 trillion per year.



"The data should definitely keep sleep out of business owners' eyes, many of whom blindly trust employees and find themselves surprised by the theft," said Or Cohen, CEO of Ari Investigations and Business Intelligence, an expert in investigating employee embezzlement. The embezzlement, but not only, but also in its scope. "According to the study, which reflects what is happening in Israel, the average amount of embezzlement was $ 1,783 and the median embezzlement was about $ 117,000.

The accountant was hospitalized, the Pandora's box opened

Monday about a month ago, an accountant in one of the large branches of a supermarket chain in Ramat Gan was hospitalized due to a fear of a heart attack.

During her absence, the network's CFO, as part of a new accounting control strategy he has adopted, decided to conduct an in-depth investigation of its operations. "My eyes darkened.

"What was discovered was that she created a fictitious supplier of goods, and transferred to her relatives sums amounting to hundreds of thousands of shekels," says the chain's chief of staff.



The fact that this is a dedicated employee, with significant seniority, is somewhat surprising, but far from exceptional.

According to Or Cohen, the reality on the ground shows that the highest rate of embezzlement was caused by veteran employees. "Studies conducted in only about 4% of employees who have been accused of embezzlement have been convicted in the past of embezzlement-related offenses," he notes.

It can happen in any company and by any employee (Photo: ShutterStock)

Another aspect examined in the study is the relationship between the size of the organization and the prevalence of embezzlement.

On the face of it, it is precisely in large organizations that it is easier to commit embezzlement, but in practice, it turns out, small businesses are much more exposed to this.

Data processing shows that most of the offenses were committed in organizations with less than a thousand employees (46% of cases - 22% of them in organizations with less than 100 employees) compared to 25% of cases in organizations with more than 10,000 employees.



"In Israel, too, most embezzlement is detected in small private companies. The reason for this lies in the fact that in small organizations there is no proper segregation of duties, allocation of resources to prevent embezzlement and work processes to reduce exposures such as: Cohen adds.

"Large organizations can allocate more resources to establish more effective control systems, in many cases also subject to regulation that improves control," he said.



And what about the division between women and men?

According to the study, 58% of the embezzlement cases were committed by men, while women were responsible for 42% of the cases surveyed.

The small gap stands in contradiction to the gender premise that men are perceived to be more involved in embezzlement.

According to Cohen, the explanation for the high percentage of embezzlements committed by women - many of them serve as accountants, a role that allows embezzlement to be committed relatively easily.



The more significant difference is in the amount: the extent of men's embezzlement is two and a half times higher than the average damage done by women.

The data collected in the survey show that the most "dangerous" age for embezzlement is between 45-35.

Cohen explains that at these ages, employees usually hold more senior positions, which allow them access to money, and they are at a stage in life where real causes for embezzlement such as financial problems or business complications arise.

Economic entanglement, but not only

And let's move on to the issue of motive: according to the data in 39% of cases, there is a difficulty in understanding the motive of the uploader.

In a third of cases, the economic problems of the uploader can be clearly identified as embezzlement.

Processing of the data shows that 14% of the embezzlement cases discovered in 2021 are due to entanglement in the gray market and 8% due to gambling.

This year, too, the need to fund drug addiction has led to 3% of embezzlement cases.



According to Cohen, a private investigator, most organizations do not perform tests to detect financial problems at the time of absorption, let alone after the employee is absorbed.

According to him, the implementation of controls for locating the transfer of funds to another account from the employee's name, locating claims against an employee, initiating enforcement proceedings, applying for a loan and frequent advances, can help locate irregularities.

At the same time, a standard of living that is higher than the employee's financial ability is a red flag that employers often miss and can help locate.



And if you thought that the public sector is free of embezzlement, then that is a real mistake.

In practice, the estimated annual damage due to embezzlement in Israel is between NIS 6-9 billion, with 80% of the embezzlement discovered in Israel in the past two years being carried out by senior officials.

This is according to the State Comptroller's report from Netanyahu Engelman on embezzlement in government ministries and government companies.



Quite puzzling but not surprising, the report also shows that no ministry has any policies or orderly means for managing all ministry ministries. Such a policy should be expressed in building a regulated program to prevent embezzlement and raising awareness of the issue among managers and relevant functionaries.

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Source: walla

All business articles on 2022-06-20

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