A WARNING that employees may resort to corporate fraud as they become “desperate” during the recession has gone out to businesses.
Past president of Warrington Chamber of Commerce Peter Kay said that corporate fraud is escalating – and the “perfect fraud” is when the victim is unaware of it.
He said: “As the recession bites some employees are under pressure to maintain their standard of living and may resort to desperate means.”
He said most corporate fraud involves collusion of an employee and that fraudulent employees are likely to have been with the company for many years and will usually occupy senior management positions.
Mr Kay warned businesses: “Prevention is always better than cure and only you can deal with it because the persons on whom you thought you could rely may well be involved in the scheme to defraud your business. The auditor or the external accountant is unlikely to detect fraud in your organisation.
“If you have that gut feeling that something is not right then experience tells you that there really is something wrong but you cannot quite put your finger on it. The fraudulent activity is most likely to be fairly simple so what should you be on the lookout for?”
He gives an example that fraudulent employees may be in receipt of cash for awarding contracts for improper prices. He advises checking for inflated levels of purchase invoices and whether the same invoices have been paid more than once by carefully checking the supplier’s statement.
He also advises personally checking, frequently and at irregular intervals, the levels of high value, realisable stock items, and any cash shortages. Employees expenses should also be checked to ensure the quantity, and that expenses are legitimate.
Mr Kay added: “There are many more situations which will come to your mind when you take time to have a long hard look at your business.
“The checking may well be a laborious and detailed process but it is probably the only way to get to the bottom of the problem. Even if nothing is discovered it will have a positive effect in discouraging certain employees from being tempted and show that you are in full control.”
Anyone with suspicions that they want to discuss confidentially, out of normal hours and away from the business premises, can contact Mr Kay either through the Chamber or email [email protected]
