Six tips for spotting corporate fraud

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Criminal lawyer and fraud investigation expert Martin Cunningham offers advice for employers on how to spot possible dishonesty in the workplace.

Many smaller businesses are being ‘milked’ by unscrupulous employees without a hint of wrongdoing coming to light. It pays to take a closer look - even at people you think you can trust - from time to time. Below are a few signs to watch out for.

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31st Aug 2010 18:19

Easy to spot - with hindsight!

In my experience of many 'theft by employee' cases the misconduct (which might technically be fraud, false accounting or forgery rather than simple theft) is extraordinarily easy to spot with hindsight - but was not spotted at the time (often because one tends to trust the people with whom one works).

One of the most blatant cases was of a shop manager who was required to bank takings at least twice each week.  One week he made no banking - and nobody noticed!  He did it again - and again - finally he went for nearly 3 months without banking a penny, and still nobody noticed.  It was only when a trainee accountant was tasked with an exercise of comparing takings in different outlets that the thefts case to light.

Another case involved an employee who cashed two payroll cheques each week - but there was only one payroll.  The cash from the second cheque was simply stolen, but because payroll details were confidential within the company the thefts were not detected until the untimely death of the usual cheque signatory.  When a new signatory took responsibility he asked why there were two cheques for the payroll for him to sign.  The rest, as they say, is history!

Simple basic precautions would avert a great many thefts.


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01st Sep 2010 10:46


I would be surprised if this one still works, given that the post generally arrives just before lunch time these days.

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By KB99399
01st Sep 2010 10:51

Fraud in business

Think of anything that a person can do to make money & someone is probably doing it!

The problem is that in many small business they are constrained by being small, ie segregation of duties is difficult & many people start work early & don't take holidays because they genuinely do not have time.

With fraud there is no "one thing" to look for. If it were that simple everyone would be a suspect. You need to be looking for a series of signs which may warrant further investigation. Then when you rub below the surface a nasty odour becomes apparent.

Taking as many precautions as possible is the best idea. Then publicising your company policy on fraud & encouraging staff to tip you off if they suspect something is a good plan.

Many business owners rely on external audit to uncover fraud - but very few frauds are uncovered this way. 

Martin D Pope FCMA CFE

[email protected]

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By Irene
02nd Sep 2010 15:43

Phoney Qualifications / Credit Checks

Being cautious, vigilant, having and implementing company's procedures takes just that. Apart from an employee outsourcing the job he/she is paid for and putting your business in debt, your business can be ruined if an employee is not qualified to do the job.  Martin Cunningham puts it right being vigilant and checking on unsupervised employees does pay. I know of  a case where an employee who claimed to have worked in accounts completely messed up the accounts even after she was trained. And there is another situation where the employee took his bedroom to be where cheques meant to be deposited at the bank ended up in a pile under his bed.

Where credit checks are not done and with no procedure in place as to how purchases are made, you might just be working hard for another to rip the benefits.  It is true small companies are constrained by their very own size however; this should not be a deterrent towards taking steps to stamp out frauds. Above everything that business will need to succeed and grow big!




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06th Sep 2010 14:18

everyday experience

from own experience, never start to loose control of one's business. the complications if one does so are enormous. believe me, i made that mistake. 

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By sluglet
13th Sep 2010 13:03

Just how useful are credit checks anyway?

Given the cost of getting a degree, passing professional exams and the way credit card companies threw themselves at us prior to the credit crunch it wouldn't surprise me in the least to find that a huge percentage of accountants and professional staff secretly have substantial levels of debt that they're covering up. All of which begs the question just how much assurance is it to do credit checks? Sure it might make you more cautious about how much trust and responsibility you give someone but given the current levels of personal debt in all sectors of society I'm dubious about how useful it is - Not to mention how ethical is it anyway to be snooping into your employees personal finances!!

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