Thursday, 16 November 2023

Fraud is something you probably don’t expect to happen in your business, but it’s on the increase and it can happen to anyone.

The increased cost of living means opportunistic fraud has increased globally by 30 percent in the last 18 months alone1. Other types of fraud are rising too. Like, for example, conflicts of interest when fictitious or inflated invoices are created to benefit someone connected to your business. Or identity fraud as a result of spam or phishing.

You or your business are more likely than ever before to be affected by fraud. So here are some warning signs to watch for.

  • Single points of control
    Is there any area of your business where one person has control without someone else verifying and signing off on key activity? For example, onboarding, procurement, invoice approvals, or budgeting? If so, review and change your process.

  • Detail re spending
    Whether it’s a consultant, materials, or overtime, what is the purchase actually for? Make sure everything you pay for is validated and that you’re getting the right person or product and that the timing is right. Something simple like an extra line on a regular invoice can add up to a large fraud over time.

  • Proximity to purchase order or payment
    Timing can be an important giveaway. Dodgy invoices often arrive just before the submission cutoff in the organisation’s regular procedures. Watch out for anything outside your usual process and anything that needs to be rushed through.

  • Human behaviour
    Is an employee behaving differently from usual? Fraud is often prompted by human problems like alcohol, drugs, gambling, and extramarital affairs. People can find themselves unable to afford a double lifestyle and turn to fraud. Keeping an eye on the wellbeing of your employees can be a preventative as well as curative measure in this regard. Asking if someone is OK means you may be able to help before things get to that point.

  • Technology
    Whether it’s intellectual property fraud or phishing and scams, IT has a role to play. Make sure everyone in your organisation knows how to recognise phishing messages and is aware of the increased sophistication of fraud attempts using AI technology, including voice and video impersonations. Make it a rule – if you’re asked to do anything that gives access to money or resources, check with a person in charge before taking action.

1 Association of Certified Fraud Examiners:  Occupational Fraud 2022: A Report to the Nations