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9 Steps to Detect Fraud Like a Pro

Posted on October 8, 2016 11:00 pm;

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By Aimee Mhaolcraoibhe

If you are the accountant of a business it is your responsibility to be able to identify a fraudulent transaction if it occurs. There are many types of factors that an accountant would look for to determine if there has been fraud in the business. Namely the accountant will look for:

Unusual transactions

Any business will develop a routine over time which will be borne out in the bookkeeping; when a change happens to the natural flow of the accounts it is something that should be reviewed to determine the reason for it.

Employees acting unusually

If an employee has acted in a fraudulent manner towards the company their stability usually goes out the window – too many holiday days and sick days or leaving early when the accountant is in are all signs that something could be wrong.

Refunds that happen more than once to the same people

If there are names that continually show up as having gained a refund from the business that could imply that fraud is taking place.

Unbalanced general ledgers

Everything should add up within a general ledger and when it does not it can mean that fraud has taken place.

Too many purchases

If the amount that a business is paying to any supplier is unduly large in relation to past experience, they could be trying to funnel money to use to convert funds or pay off a purchasing agent.

Ghost employees

If there is a name of someone on the payroll whom the accountant has never seen and cannot trace, this can be an instance of fraud.

Paying bills twice

Duplicate payments can be a way of hiding a different financial transaction.

Shortage in inventory

If there is less inventory in stock, then what shows as existing in the books it could be that the inventory was fraudulently sold.

Write offs

Writing off a receivable can be an indication of something fraudulent as well.

This is not a complete list but it shows the types of factors that make an accountant become aware that fraud has taken place. Through ongoing monitoring, it becomes obvious when something unusual occurs and at those times consideration of fraud is always a factor.

For those of you who may be interested in a formal qualification, we would welcome you to take a look at the various accounting and finance certification we offer.


Cooking the Books: What Every Accountant Should Know About Fraud,

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