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'
- Significant changes in behaviour that you've noticed
- They have large personal debts or financial losses, and a desire for personal gain
- Audit findings deemed to be errors or irregularities
- Transactions taking place that were at an odd time, odd frequency, unusual amount or to odd 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
