If you suspect unethical financial transactions or fraudulent behaviour within your business, prompt and cautious action is crucial. A leak requires immediate attention to prevent further damage—fraud is no different.

Addressing suspicions of fraud or improper transactions involves acting swiftly while ensuring evidence is preserved. To do so effectively:

• do not alert the perpetrators that you have suspicions – this may lead to them destroying crucial evidence and damage your chances of recovering funds; and
• speak with your legal representative, a Forensic Accountant or suitably qualified consultant immediately – it is important that the investigation be carried out thoroughly and is well documented to ensure that any evidence is preserved for settlement negotiations, insurance claims or potential Court proceedings.

How to prevent fraud

The Association of Certified Fraud Examiners (‘ACFE’) has published a Fraud Prevention Check-Up. This is a useful tool for identifying gaps in an organisation’s fraud prevention processes.

It is particularly important to consider:

1. Who is responsible for managing fraud risks?

To what extent have you created ‘ownership’ of fraud risks by tasking specific senior level employees with the responsibility of managing fraud risks?

2. What hurdles have you put in place?

Have you developed measures and controls to detect, eliminate or reduce risks?

For example:

• If sales representatives receive commission on their sales, they have an incentive to fraudulently inflate their sales results. Setting a threshold at which sales are reviewed by a sales manager will assist in detecting falsified sales records.
• Segregation of duties is a simple and effective way to eliminate risks. Do not have the employee responsible for preparing payment documents and be responsible for approving payments.

3. Can your hurdles be jumped over?

Even if you have put fraud prevention controls in place, senior level employees often have the power to override the controls.

To prevent this, you need to create an environment where ethical behaviour is promoted, and employees feel comfortable reporting wrongdoings.

You should consider the following:

• Do you have a code of conduct?
• Are your employees bound by a Code of Ethics?
• Are you regularly providing employees with training relating to fraud awareness and education?
• Have you implemented systems enabling employees to anonymously report suspicious behaviour or potential wrongdoings?
• Have you incorporated ethics and compliance into employee performance measures?

How can Pilot assist you?

Pilot can:

• engage in initial discussions with key stakeholders where unethical financial transactions or fraudulent behaviour is suspected;
• undertake investigations to determine the extent of the fraud;
• report on the findings of our investigations and quantify any financial consequences – our reports can be used in settlement negotiations, insurance claims or Court proceedings depending on your unique circumstances;
• review processes and provide recommendations to prevent similar occurrences in the future; and
• provide fraud awareness training.

Learn more

For more information on how Pilot can assist you with mitigating your risk and preventing fraud, contact Jennifer Veitch, Dean Strati or your Pilot Advisor on 07 3023 1300.