Here are some warning signs that embezzlement is taking place:

• Increase in overall sales returns might represent a concealment of accounts receivable payments.
• Unusual bad-debt write-offs could be covering up a fraudulent scheme; a decline or unusually small increase in cash or credit sales could mean that some sales are not being recorded.
• Bounced business checks could indicate that funds are being siphoned out of your bank account.
• Inventory shortages could indicate fictitious purchases, unrecorded sales, or employee pilferage.
• Profit declines and increases in expenses could be a sign that cash is being siphoned off illegitimately.
• Slow collections can be a device to mask embezzlement.