Employees pose the greatest FRAUD threat - Is fraud a by-product of economic recession?

14th September 2015

An Association of Certified Fraud Examiners (ACFE) report carried out in the US in 2009 stated that 55.4 per cent of their respondents said fraud has significantly increased in the previous 12 months compared to the level of fraud observed in prior years with 49.1 per cent of respondents citing increased financial pressure as the biggest factor.

Employees pose the greatest fraud threat and 48 per cent indicated that embezzlement was on the rise.
Similar statistics were found in the UK with small and medium sized firms particularly vulnerable as they often depend on a small number of employees to carry out key accounting functions.  On top of this, anyone can call themselves an accountant or a book-keeper.

If you’re employing financial staff or outsourcing this service how can you mitigate your fraud exposure and protect yourself?

Well obviously we’d like you to use an accredited professional outsourced finance department like Insight Associates where reassurance comes from knowing we:

  • Are members of a professional body with a practising certificate
  • Have Professional Indemnity Insurance
  • Have a detailed client engagement procedure outlining scope of work, fees, complaints, money laundering etc.
  • Have stringent internal policies, procedures and systems regarding checks and controls
  • Agree approval processes with clients
  • Reconcile accounts each month and provide monthly management accounts and reporting.
If however you do decide to venture down the employment route there are some simple things you can do to increase your protection:
  • Don’t put all your eggs in one basket – for example split invoicing, banking and supplier payment tasks between 2 staff so there's less opportunity for collusion.
  • Recruit a member of a professional body and ask to see their qualifications – there are some professional accounting recruitment consultants out there.
  • Make sure you understand the reporting figures that are being presented to you each month. If something doesn’t seem right query it, ask for supporting documentation and contact outside agencies such as HMRC or the bank.

Little%2Bbook%2Bof%2Bbig%2Bscams.JPGIf you have any fraud concerns or need outsourced finance department advice please do get in touch and feel free to download our easy exercises for financial management e-book.

Alternatively the Metropolitan Police have published this great Little Book of Big Scams that has some really useful information.

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