Posted on January 22, 2017
Sometimes the way people behave might suggest that they are committing a fraud. These signs are called ‘red flags’. Although by themselves they may not be any cause for concern, a few of these together might be enough to alert you that something isn’t quite right.
‘Red Flags’ can be:
Significant changes in behavior that you’ve noticed
They have large personal debts or financial losses, and a desire for personal gain
Audit findings revealed errors or irregularities
Transactions taking place at an odd time, odd frequency, unusual amount or to uncommon recipients
Internal controls that are not enforced, or often compromised by higher authorities
Discrepancies in accounting records and unexplained items on reconciliations
Missing documents, or only photocopied documents available
Inconsistent, vague or implausible responses arising from inquiries
Unusual discrepancies between the client’s records and confirmation replies
Missing inventory or physical assets
Excessive voids or credits
Common names or addresses of payees or customers
Alterations on documents (e.g. back dating)
Duplications (e.g. duplicate payments)
Collusion among employees, where there is little or no supervision
One employee has control of a process from start to finish with no segregation of duties
