Main types of financial fraud that you should be aware of:
- Accounting:
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.
- 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.
- Data:
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.
- Misappropriation:
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.
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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.
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Protect yourself from fraud and speak with Foster, your professional Cairns accountant today.
