Fraud Detection Tips

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1.     Paper Folds 

When examining documents such as letters, invoices, orders and other documents that are generally received through the mail, check if they have the folds that you would expect for them to fit in an envelope. 

If they do not have the folds they may not have been received through the mail and may have been put into the payments system as part of a staff fraud.

2.     Photocopies 

When photocopies of invoices, receipts, orders and so on are used instead of the original you should find out why. 

Often photocopies are used in expense frauds where the original document has already been used to claim expenses. 

The photocopies may also be used because the original document has been altered and the alteration has been disguised on the copy.

3.     Payments to Staff 

A comparison of accounts payable staff addresses with vendor addresses will show frauds where staff are making payments to themselves through fictitious businesses.  

4.     Period End Fiddles 

Often local management are under pressure to produce results to meet their budgets, quotas are key performance indicators. They may fiddle the results when they have not been able to obtain them legitimately. 

Frequently this is done after a trial balance or set of draft financial statements has been produced. 

Look especially for entries posted after the trial balance or draft financial statements have been produced. 

This is because they first find out how far from the target they are and then put through the fraudulent entries to get to the target. 

5.     Collusive Tendering 

There are a number of ways of finding situations where tenderers get together and fix the price that you will pay for the contract. These include: 

• Similar terms and conditions in the tenders.  

• Very poorly researched or prepared tender bids. 

• Tenderers winning contracts that indicate that they have divided the market geographically, in business sectors, or in some other way. 

6.     Missing Documents 

Missing documents are often taken as accidents or systems problems and ignored. In many cases the documents are missing because they have been used in a fraud and the perpetrator has destroyed the evidence. 

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