What do you do when you discover fraud in your business?

Advice on detecting fraud in your business

There are few incidents that feel worse than when you find fraud and irregularities in your account. When your trusted leaders, employees or partner are stealing from your business, it can be a tricky challenge responding in the right way. This is why finding an effective way to detect these irregularities is the best course of action – but where to start?

In order to minimise operational and financial damage, it’s important to stay calm and follow these steps from our forensic accountants, so you can deal with fraud more effectively and efficiently.

Staying Calm…

It can be tempting to act rash when confronted with fraud. Actions such as on the spot firing could actually do more harm than good. Instead, act rationally. develop a plan, gather evidence, and act in the interests of your company. These are things you can’t do when you react emotionally. Even if fraud hasn’t occurred yet, it’s always worth working alongside your legal and accounting professionals to lay out a plan of how you will deal with this if it happens. Knowing what to do beforehand will make the process a lot easier for you.

But not too calm

As important as it is to not overreact to the situation, it’s equally as critical to not be overly relaxed. More often than not, employers simply sweep it under the rug when a team member acts suspiciously. Although it’s an awkward situation, they think the problem will simply go away. This is the opposite of what you should do. This is a signal to the perpetrators that they are free to continue without consequences.

However, you should never react without having gathered sufficient evidence.

Be discreet

At least for the time being. Those committing fraud, which they believe is going undetected are usually surprisingly brazen. If the fraudster finds out you are on to them, they may destroy the evidence to cover their tracks, which will complicate things further. Especially if it goes to court. Avoid alerting their suspicion until you need to. A good fraud examiner will be able to investigate without being obvious.

Secure relevant data

You should already be backing up your financial documents and company information. If you’re not, it’s time to start. Keep pristine copies of all information: bookkeeping records, payroll and expense reports. Those who commit fraud usually have access to these records.

Prepare to rehire

Once irregularities and fraud have been discovered, the minimum consequence is the termination of their contract. This means you will need to rehire. As fraud is often committed by those in positions of power and trust, finding a new replacement for a high- level position will be challenging. Prepare for this possibility early.

Protect your reputation

The trust of your customers, employees and partners are invaluable assets in any organisation. If the situation is mishandled, fraud could be a huge blow to your reputation. If you act decisively and fast you will certainly suffer less damage to your reputation than if you ignore till later. Make sure they all know the truth, and what you have done/ are doing to correct the issue.

 Set an example

Once fraud has been recognised, there are many options you can take: a civil lawsuit, criminal prosecution, or termination. Employers should opt for the most severe penalty. Although it may appear harsh, especially if they were formerly a friend and trusted employee, the rest of your organisation need to be aware there is a zero tolerance policy on fraud.

Reach Out

We don’t recommend facing fraud alone. It’s full of accounting and legal issues. Get on the phone to your trusted accountant who will help you through the process. You will also need to contact your insurance company if fraud has occurred. An employee dishonesty policy may mean you have grounds for a claim, meaning you can recover some losses.

Finding an accountant

Fraud can happen to any business, no matter what size. Though, through getting a helping hand and using proven strategies, it is possible to recover and prevent it happening again. Contact our specialist team of forensic accountants today on 0161 832 4841 or fill in our online contact form. With offices in Manchester city centre and central London, we are ideally placed to assist people from the North West and from across the country.

If you feel there is fraudulent behavior in your business. Watch out for these signs…