Business fraud is non-discriminatory; it is generally an opportunistic crime and can happen to any business regardless of business size or sector.
Although external business fraud often hits the headlines, statistics show internal fraud is more likely.
Internal fraud generally comes down to accessibility to the business in areas of finances, business assets, stock, equipment and intellectual property.
“We recently worked with a client who was concerned by the amount of unaccounted spending their business had over a short period. They needed assurance their business was risk free, or if risks were identified they needed assistance understanding and rectifying these issues
By using smart technology combined with manual investigation, BDO recognised that a staff member in the payroll function was making additional payments to their own bank accounts we also identifying other business issues such as potential GST overpayments and a range of invoices that the client had appeared to pay twice.
The client was able to address the fraudulent employee, regain GST overpayments and duplicated invoice payments based on the analysis we provided.”
Never overestimate the role company culture plays in mitigating the risk of internal fraud. Trust and respect are major factors and need to come from the top down. There needs to be a balance between empowering employees and trusting within reason.
Although there’s no rule as to how regularly to monitor for fraud, it comes down to the business owner having a solid understanding of the business and how it operates, in elements of revenue, cash flow and stock levels.
“If you have identified a case of suspected fraud external help should be sought immediately.”
The first sign of fraud might simply be that something isn’t quite adding up, for example, costs are going through the roof or projected stock levels aren’t meeting demand. That’s when you should turn to an external advisor, someone who can objectively delve deeper into what may be occurring.
A few years ago there was an incident of a company director making baseless outrageous claims to foreign media in order to inflate the share price. When the statements were found to be false the company director proceeded to claim he had been misquoted by the journalist. BDO’s specially-trained forensic technology team were able to examine the company’s computers and uncover deleted documents detailing the spurious claims.
If you have identified a case of suspected fraud external help should be sought immediately. The immediate priority is to preserve evidence and work to minimise business loss or damage.