Top Tips: Warning Signs of Fraud
Unfortunately, fraud is not unique occurance within organizations. Remember that prevention of fraud at your organization is better than having to diagnose and cure! The following signs may be an indication of fraud or abuse at your organization. Use with care!
From the accounting records
- Lots of corrections to the manual cashbook – this may include extensive use of white-out or blocked out figures
- Pristine records – .ie. a manual cashbook that looks as if they have all been written on the same day/in the same hand – this could be an indication of rewritten books
- Delayed banking of cash received – shown up by bank reconciliation
- Records not kept up to date – i.e. deliberately delayed so managers cannot detect false accounting going on
- Missing supporting documents – e.g. certain bank statements destroyed to cover someone’s tracks, or a project officer who regularly claims to have ‘lost’ receipts
- Debtors rising unexpectedly – e.g. if debtors have paid but the cash is being pocketed. (If there are poor controls in issuing receipt books, someone could take an unused book and issue valid receipts without them being entered into the accounting records.)
- Hand-written supporting documents with errors and corrections on them. Indicates possible changes made after the goods or services were purchased.
- Cash counts not reconciling to the accounts but reconciling at the next cash count – possible borrowing of funds by the safe key holder
From the reports
- Budget monitoring reports showing inconsistent behaviour between line items – eg project-related expenditure is under-spent due to delays – except for fuel which his over-spent (This could indicate abuse of the vehicle.)
- Vehicle log books not maintained in an appropriate level of detail. (This could indicate abuse of the vehicle.)
- Budget monitoring reports delayed – to cover up something?
From non-financial areas
- Working very long hours – first in last out of the office? Could mean that they are having to do extra work to cover their tracks?
- Never taking holidays – can’t afford for someone else to see what they are doing!
- Change of lifestyle – spending patterns don’t match their income (e.g. personal building projects, social habits, expensive car)
- Creating ‘smoke screens’ – where someone is making a false accusation about another team member
And some ideas on fraud prevention…
- Make sure you have robust internal control systems in place
- Visit projects, and see if the activities carried out roughly match the expenditure
- Share financial reports with beneficiaries, and ask if they think they have had value for money
- Hold regular meetings with other staff at all levels (e.g. project and administrative staff, board members, etc) to discuss financial reports, making budgets and reports openly available
- Help non-finance staff and managers improve their financial skills
Fraud Investation Help
If you are concerend about fraud, our team of experts can help conduct a confidential investigation into your organization.