All businesses must be prepared to detect fraud and fraudulent activity at all times. Fraud can devastate a business of any size. No company is safe or immune from fraud and as a result should always be on the lookout for fraudulent activity. Many companies look to prevent fraud through specific policies, procedures and training in an attempt to educate their employees. This will help go someway to prevent fraud, but often it’s not enough.
One potential solution is to hire a forensic accountant. A forensic accountant will trawl through every aspect of your businesses in a similar manner to an auditor highlighting any red flags that appear. This personal audit will prepare you for the worst before the worst happens. We recommend Alexander, the Manchester based accountant with forensic accounting experience.
A forensic accountant will look for a number of red flags that we will discuss in the next paragraph.
Although missing documents are commonplace and accidents do happen, auditors will look at this with suspicion. If multiple documents go missing at different times the warning bells of fraudulent activity will sound. Missing check numbers or gaps in reconciled check numbers can also be an indicator and must be addressed.
Product loss and internal shrinkages are normal in a business but too much of it can raise suspicions of foul play and fraud. Ensure that a process is in place so that all products and commerce is accountable and checked regularly. This should minimise the risk of shrinkage long term and will deter fraudsters from acting within your company.
Excessive Voids & Returned Cheques
Again voided sales and returned cheques are all normal, on a small scale. When they begin to mound up suspicion arises. A voided sale slip essentially means when a sale goes through but the payment was diverted elsewhere, potentially indicating fraudulent activity.
In most cases duplicate payments are not fraudulent but simply accidental. The issue can become complicated as it is possible for an employee to forge an endorsement of the payments which would then lead to fraudulent activity.
Rounded Up Payments
One telltale sign of fraudulent activity is well rounded numbers. Fraudster will often use whole numbers that don’t include pennies, for example £50.00 rather than £50.78 which is perhaps more naturally common. This is a common indication of fraudulent activity and must be prevented with regular invoice checks and digital databases.
Invoices Under Approval Amounts
Some employees are aware of threshold management approval and will invoice for just below the approval level. For example if the approval level is £3000 and the invoice comes in at £2999 this can raise suspicion if a regular occurrence. We advise businesses to iron out any irregularities like this to avoid suspicion.
Again a fairly obvious one by companies using phantom addresses or mail drops are often doing so to hide fraudulent activity and should be avoided. If you know of this kind of activity going on in your company then you must highlight the issues it can bring in order to prevent bigger trouble.