Post 1 of 5: Recent Examples of Fraud We Have Seen

Is An Employee Stealing From You?  Fraud presents itself in many ways in businesses!

Over the years, we have seen dozens of examples of employee fraud. From buying personal gasoline and clothing on company credit cards to dispersing additional payroll checks to themselves, employees find creative ways to steal from their employers. We’ve had numerous business owners say, “There’s something going on, but I don’t know what.” We’ve learned that when a business owner suspects something is wrong, it usually is, and we will search until we find it. Below are a few examples of fraud we have seen recently:

A common form of fraudulent disbursement is a billing scheme.

This is when the bookkeeper who is a check signer writes herself checks from QuickBooks, prints, signs, and then deposits them in her bank. Then, she goes back in and re-codes the checks to a standard vendor used by the company. This can go undetected for years if she is sneaky enough. A recent twist we saw was when Leslie (who wasn’t a signer) in Accounts Payable formed her own fictitious company and started submitting invoices through the mail to her own department. The AP department was accustomed to paying invoices without much detail and little questioning, so they began mailing checks to this “special” vendor.

Another form of fraudulent disbursement is the payroll scheme.

In one midsize company that had a bank account with four separate signers, the payroll clerk, Rick, was cutting himself multiple payroll checks on a regular basis. He would then corner a different signer than the partner who signed the whole payroll batch and would get the additional check signed. One day, a signer remarked to another that he had just signed Rick’s check, and the other partner said that he had, too! This led to a full-fledged investigation finding thousands of dollars stolen through fraudulent payroll checks.

A new avenue for fraudulent disbursements is online bill pay.

One client hired Bob who had recently moved to the area, to handle their books. The business primarily used online bill pay, which has no tracking capabilities. We found that Bob set up his own utilities and personal vendors- such as electricity, phone, and internet- with the same companies the business used so that when he paid the company’s bills, he could also pay his own bills with company money.

For the 2nd post in our series of 5 posts on fraud, with more examples of fraud that we have seen, click here.

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