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The Association of Certified Fraud Examiners (ACFE) has provided insight into the world of occupational fraud in their 2016 Global Fraud Study, Report to the Nations on Occupational Fraud and Abuse.

The Study estimates that the typical organisation loses 5% of annual revenues to the hands of fraud, with the median loss from a single case being $150,000.

So who is most likely to commit fraud within an organisation?

According to the Study, the majority of occupational frauds are committed by staff at the employee level, closely followed by those working at the managerial level.

Despite this, the Study also states that losses incurred are usually commensurate to the perpetrators level of authority, with owners and executives committing the most costly acts of fraud.

In light of this, the ACFE have provided some behavioural red flags to watch out for. Some behaviours commonly frequented by perpetrators include: living beyond means, financial difficulties, unusual close association with vendor and/or customer, control issues and unwillingness to share duties.

The full Study can be found on the ACFE website. 

Or, if you don’t have time to read the full report here are some of things that you can do to mitigate potential risks in your business e.g.:

  • Segregate duties – if possible, make sure that the person who reconciles your bank account is different to the person who pays your bills and wages
  • Enable two factor authorisation on bank accounts and software
  • Ensure stocktakes are conducted regularly to monitor stock shrinkage
  • Do mini quarterly ‘audits’ – check details of customer returns, spot check stock counts, review eftpos refund transactions
  • Compare KPI’s to previous years e.g. Are your debtors and creditors at similar levels, has your shrinkage % increased?
  • If using cloud accounting software, ensure anyone who has access to this software has their own log-in so that you can follow the audit trail. Same goes for Point of Sale Machines, bank accounts etc.

While we all like to think that our team is doing the right thing, unfortunately, we still hear of instances where fraud has occurred. Having the correct systems and procedures in place can help minimise the chances of this happening. If you need assistance with setting up your systems, please give us a call and we can see what we can do to help you.

General Advice

The information provided by Bentleys (Sunshine Coast) Pty Ltd does not constitute financial product advice and is for general information only. It is written without taking into account any individuals personal objectives, situation or needs, and is not intended as professional advice. Any person acting upon such information without receiving specific advice, does so entirely at their own risk. Please contact your Accountant to discuss your personal situation before relying on this information.