Posted: 09 / 06 / 2023

For any organisation to thrive, the employees need to have a detailed understanding of the processes which will help them to do their job with maximum efficiency.  However, this can also pose a significant risk to the company – employee fraud.  

When staff have intricate knowledge of the systems they’re using, and have contributed to their creation, there’s a chance they might take advantage of it for their own gain. 

Our top tips for detecting employee fraud 

Fraud committed by employees for their own benefit can happen within a business in a variety of ways, from teeming and lading, to misleading management or external parties through misstating financial results.  

Some common examples of fraud arise as a result of the knowledge of the business and autonomy of Finance Directors and Financial Controllers, however, we have seen instances of fraud involving employees at a range of levels of seniority.   

We have been instructed on matters involving a variety of instances of suspected or actual employee fraud, including the following:  

  • Accounting staff setting up fake suppliers, in order to divert funds out of the business and make payments to themselves. 
  • Self-employed contractors who were suspected to have overcharged the company for their services. 
  • Misuse of client funds. 
  • Misleading information within Board presentations made by a Finance Director, presented to the Board to conceal poor performance. 
  • Manipulation of accounting treatment to artificially inflate the sale price of a company, or to obtain significant funding from banks and other lenders. 

 The Sedulo Forensics team have extensive experience of working with a full range of clients from SMEs to large corporations to prevent, as well as identify and investigate, incidences of employee fraud.  We can intervene to tighten financial controls, limit the damage of fraud, and support any proceedings against the relevant individuals. 

We can discuss your concerns and exact requirements and work with you to define a scope for the investigation work.  We will be able to conduct a detailed review of accounting records, financial data and any other relevant information to understand the nature and extent of the issue, as well as quantifying the potential impact.     

Implementing controls to protect your business  

The above examples demonstrate why it is essential to have financial controls that limit the power of individuals and ensure that there is sufficient scrutiny built into your organisation’s accounting processes.  

Businesses regularly instruct us to conduct internal reviews of processes and controls and identify and measure the likelihood and impact of key risks.  We work closely with our audit team who have extensive experience in assessing financial controls, both within financial departments and across wider organisations, to review fraud risks and evaluate the potential for key members of management to override financial controls. 

If you suspect fraud, or are worried about your current level of compliance, do get in touch; we can have an initial discussion on a strictly confidential basis to review your concerns and talk through how we can help. 

 

Author details

Mark Strafford | Head of Civil Forensic Accounting 

Email: mark.strafford@seduloforensic.co.uk

Contact Number: 07867 179 007