As investigators continue to aggressively pursue allegations of business embezzlement in the North Bay, regional fraud experts warn that many local companies and nonprofits still lack the basic internal practices needed to catch and prevent those crimes.
The problem is not unique to the North Bay. Nearly half of U.S. companies with fewer than 100 employees lacked an anonymous tip line in 2011, considered the single most effective tool for discovering embezzlement and required for publicly traded companies, according a 2012 study of global fraud by the Association of Certified Fraud Examiners.
Small organizations consistently lagged behind larger companies in preventative measures, and those cases also involved the largest median losses of $147,000, according to the trade certification group. Losses up to $1 million were reported in 20 percent of cases, and a typical organization loses 5 percent of its revenue annually to fraud, according to the report.
Regional fraud experts said that those risks are particularly acute in the North Bay, a region known for its density of small businesses and nonprofits. In pursuit of efficiency at a time of slim margins, owners and managers often overextend the access of those with control of the organization’s accounts and essentially empower those employees to commit fraud. [read more of "Embezzlement: A serious issue too few take seriously"]
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