The risk of fraud committed by staff and contractors within organisations is on the rise. Much of the work carried out by chartered accountants can help prevent internal fraud from happening in their organisations.
ICAEW has created a series of videos examining real-life cases of businesses that have been hit by fraudulent activity.
In the second video, we highlight the case of a financial controller who attempted to steal £20,000 from her company, and outline four actions that organisations can take to deter internal fraud.
Internal fraud (sometimes known as employee fraud) is any criminal wrongdoing or deception committed against a business or organisation by a member of staff. It covers a wide range of scams, from invoice, payment and procurement fraud to expenses and subsistence fraud. Internal fraud is a substantial risk for all organisations, regardless of size, industry or country, and there’s no single reason why it takes place. However, there are steps that organisations can take to limit the opportunities for fraudsters to act and to detect any fraudulent activity. For instance, unusual transactions (which can be a sign of fraud) can be picked up by performing detailed and regular variance analysis.
Omid Tissier, Economic Crime and Ethics Manager at ICAEW, said: “By the nature of their relationship with an organisation, members of staff have unique access to sensitive records and resources that outsiders do not. As a result, internal fraud can have particularly devastating consequences for organisations. It’s crucial to have rigorous controls and processes that aim to limit the risk of internal fraud taking place, and encourage staff to speak out if they see anything suspicious.”