Main types of financial fraud that you should be aware of:
Employee manipulates the company’s accounts to cover up theft and/or misappropriation.
No adequate supervision and or internal controls in existence.
Most prevalent where only one employee has access to accounts receivables, payables and payroll.
Most common type of employee fraud.
Payroll employee “creates” bogus employees on the books, falsifies timesheets and pays wages into unauthorized bank accounts for their personal benefit.
This is becoming more and more common. “Hacking” into confidential data involving identity, health, income tax and banking details. This can be especially devasting for a company that relies on its intellectual property for its product and/or service.
- Bribery, corruption & kickbacks:
Employee allocating jobs to outside contractors and/or giving discounts to customers for monetary advantage.
Using a company’s expense account for personal expenditure, stealing cash from the till, not recording a sale and pocketing the cash when customer pays, double claiming for expenses, etc.
Preventing & detecting fraud:
- Before hiring any employee, conduct rigorous background checks including police checks.
- Ensure work duties are segregated and that there are cross-checks on employees’ work.
- Conduct random internal audits of company accounts.
- Conduct random risk assessments to highlight areas needing attention.
- Rotate employee duties where possible.
- Make it mandatory for employees to take holidays.
- Change passwords ever so often.
- Shred sensitive documents that are no longer required.
- Invest in specialised fraud software that will detect if an employee is trying to access sensitive data/information.
- Implement an employee Manual code of conduct, ethics and confidentiality.
Protect yourself from fraud and speak with Foster, your professional Cairns accountant today.