Embezzlement is the criminal act of withholding assets for the purpose stealing them by one or more persons to whom the assets were entrusted for a specific purpose. For example, a lawyer might embezzle funds from the trust accounts of their clients; a financial advisor might embezzle the funds of investors; or a bookkeeper might embezzle funds from the company they work for.
Embezzlement usually is a premeditated crime performed methodically, with the embezzler taking precautions to conceal his or her activities of the criminal conversion of the property of another person, because the embezzlement is occurring without the knowledge or the consent of the affected person. Often it involves the trusted individual embezzling only a small proportion or fraction of the total of the funds or resources he/she receives or controls; in an attempt to minimize the risk of the detection of the misallocation of the funds or resources. When successful, embezzlements continue for years (or even decades) without detection. It is often only when a relatively large proportion of the funds are needed at one time; or they are called upon for another use; or, when a major institutional reorganization (the closing or moving of a plant or business office, or a merger/acquisition of a firm) requires the complete and independent accounting of all assets that the victims realize the assets are missing and that they have been duped by the embezzler.
In the U.S., embezzlement is a statutory law, thus the definition of the crime of embezzlement varies according to the given statute.
Financial statements (or financial reports) are formal records of a business' financial activities.