Broker News

Staff who fiddle

Fraud is a serious crime that some businesses are more susceptible to than they realise.

Professionals such as doctors and engineers are often most at risk but all businesses, both large and small, are increasingly exposed and vulnerable to fraud.

And what is more worrying is that it’s increasingly difficult to catch the smart ones who can cover their tracks with confusing record-keeping tricks.

Employers are advised to look out for the employee who: 

  • Does not take holidays and who handles accounts payable and receivable
  • Embarks on a sudden change of lifestyle, developing a taste for expensive playthings
  • Gets in early and always leaves late.

Accounting firm HLB Mann Judd has countered this by developing a fraud prevention program. 

Drawing on the experience of colleagues in other countries, the firm has a system for assessing a firm’s health and the calibre of checks and balances to prevent costly criminal practices of staff.

Chief fraud “detective” or audit partner is the aptly named Darryl Swindells, who believes most firms are ill prepared for potential fraudulent behaviour within their workforce.

“The tragedy is that most of the fraud that does take place can be avoided with awareness of the problem and the implementation of prevention strategies,” he says.

Swindells once encountered a case in an engineering firm employing three people where one of the women running the administration had been fiddling with the books for five years and had bought a couple of home units from the proceeds.

He believes professionals such as doctors are particularly vulnerable to fraud because of their reliance on secretarial and bookkeeping support to run the business side of their practice.

Swindells says there are many ways a small business owner can be robbed from within. He says a careful employer will monitor employees who: 

  • Open mail and could be simply pocketing cheques
  • Use corporate credit cards for personal use
  • Use company cheques to pay personal debts
  • Process fake vendor invoices for payment
  • Send products to bogus companies and write off the debt
  • Take home company supplies
  • Use the assets of the business for private use.

Swindells says in many cases it’s family members who have their fingers in the till. “There was one case where every penny that went into the cash register for five years was never banked,” he recalls.

In another case, a woman was thought to have embezzled a six-figure amount and had frustrated police investigations with the calibre of the cover-up. The investigating officer was reported to have said that if someone could come up with the $6000 to pay for the work needed to find the evidence, then they were to proceed. If not, they would not be pursuing the case any further.

Given this, the best advice is for employers to create a workplace where good example by those in management shows that slack standards are not tolerated.

“There is a wide variety of ways an organisation can be defrauded, and one of the best ways of preventing all types of fraud is to develop a work climate which makes fraud difficult to happen and lets employees know the rules,” Swindells says.

Published on: Friday, April 13, 2012

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