Beware: the fraudsters are in your business’s very midst

LAST year, 63 per cent of frauds occurred in London and the South East, incurring more than £878m worth of damage to businesses. But contrary to popular belief these frauds weren’t all internet-based identity frauds, but were conducted by members of staff from within companies. To help you spot such instances of skulduggery, we asked fraud expert Simon Bevan at accountancy firm BDO about the five most common cases found in small to medium sized businesses (SME).

1. PROCUREMENT
Bevan explains: “A classic case of procurement fraud is a member of staff colluding with suppliers for kick-backs.” The way to spot these dodgy folk is to watch out for procurement officers living beyond their means: “It’s a sensitive issue, but if the person in charge of procurement is always splashing their cash, they might be up to no good. 80 per cent of the fraud cases I encounter are staff members getting personal benefits from office deals.”

2. TREASURY
For SMEs, this fraud often involves businesses that require staff to exchange currencies. Staff are often found to be gambling on the exchange market through speculation. This can be spotted when the fraudster starts trying to cover up his losses.

3. ASSET DISPOSAL
This fraud normally occurs when you sell your business. The scenario usually involves a senior manager conspiring with the buyer by excluding things from the fixed asset register to reduce the price of the business. To prevent this, regularly inspect your registers.

4. RECRUITMENT
This involves staff lying on their CV, either by presenting fictional qualifications or failing to mention a job they were dismissed from. Bevan says that employers should give extra consideration to those who took qualifications overseas and those with gaps in their employment history.

5. BUSINESS-WITHIN-A-BUSINESS
This type of fraud involves staff members siphoning off customers and directing them towards their own venture. These businesses are often run over the internet and operated from the employees desk during working hours, so if you are suspicious, keep an eye on the way employees use their time.