April 2, 2022

Business fraud: how to deal with it?

What are the frauds, and who are the fraudsters who threaten Corporate and start-ups in the United States?How can the manager protect his company? How can he protect when his company is the victim of fraud, theft, or a crime related to cybercrime? Analysis, advice, and testimony.



Computer crime, misappropriation of assets, accounting fraud, purchasing fraud, CEO fraud, HR fraud, corruption: these are not the threats that are lacking in US companies!If we rely on the figures, the number of corporate frauds is increasing - even exploding in 2021, it almost doubled compared to 2020!


An observation that should be qualified, of course. But companies are interested in setting up procedures, and data analysis systems, which will allow them to sound the alarm from the first anomaly detected quickly. Update on the state of corporate fraud today, expert advice, and the exclusive testimony of a financial director.


The testimony of a financial director: "Everything was done according to the rules of the art..."


Few companies are ready to testify regarding the frauds they have suffered. The financial director of one of them nevertheless agreed to do so for Les Echo's Entrepreneurs, on condition of anonymity.


In October 2019, his company was the victim of a "rent fraud," one of the most widespread. This went unnoticed until the actual owner of the premises came forward. The fraudster had contacted the company's "accounts payable" department pretending to be the owner. It provided a bank account statement by email on the pretext of a change of bank account. According to the rules, everything had been done official documents, papers in order, logo. But all of this turned out to be false. "The man was very well informed," he says. A classic!


False official documents

 It is enough for the company in the line of sight to respond to type documents, imitating the real ones, fort he fraudster to obtain the essential information, supplemented by those easily found on the Internet. "We had all the documents certifying the change of reference, and the payment was validated despite the checks carried out by the two signatories," recalls our interlocutor. Since then, a new control procedure has been put in place.


Four tips to prevent business fraud.


When they are victims of fraud, theft, or crimes related to cybercrime, Corporate and start-ups feel helpless. How to take the lead? Here are four valuable tips to avoid any unpleasant surprises.

 Set up a double control system

 According to CPA expert &financial Expertise Conseil s, even more than fraud related to cybercrime, internal fraud is the most common. Therefore, it is necessary to limit the amounts to be transferred and have these transfers made by two confirmed people within the company: for example, the general manager with the financial director or the general secretary. "Better two signatures than one, and therefore a doublecheck. Diversion issues often stem from weak internal controls and a lack of safeguards," he explains.

 Review the mode of organization

 Many accounting frauds are linked to Bank transfer, sensitive elements that can be modified or falsified. "I tis important to have control over transfers and the signing of checks, to ask that it be the executive secretary who sends these checks rather than the accountant. This requires reviewing and changing internal procedures verifying the reliability of management and control tools to make them more effective.This can sometimes be misunderstood. It will no doubt be necessary to reorganize the services by taking advantage of the development of new activities", explains our interlocutor. This recognizes that business leaders invoke auditors to modify specific rules to pass the bill. He plays the game himself: "Let entrepreneurs not hesitate to use us. Our role is to assess, advise, alert and not impose," he says.

 The business fraudster: a model employee

 In general, the identification of corporate fraudsters holds many surprises. More than 55% of fraud reported by US companies is the work of external scammers, compared to39% of internal fraudsters – results that are the opposite of those observed at the global level, where the vast majority of scammers are internal to the company! Here again, according to the study's authors, this US particularism could be explained by the frequency of "fraud on the president."Apart from this peculiarity, internal fraud remains preponderant mainly, including the United States.

 The authors of the survey draw a composite portrait of the fraudster in the United States, which hides his game well: it is a man in 75% of cases, with a seniority of more than ten years (50%), aged from 41 to 50 years old (43%), employee or middle manager(49%). And of course, this individual with the air of a model employee is appreciated by his colleagues and his superiors at least until the discovery of the pot-aux-roses!

 More than half of Us companies have been victims of fraud in 24 months, and 10% of them say they have suffered"presidential fraud." »

  If we rely on the latest edition of the survey conducted by the auditing and consulting firms, the number of corporate frauds is exploding in 2021, and it will almost be doubled compared to 2019. An alarming finding that must be qualified warns the authors of the study. If there are more reports, it is primarily because companies are better equipped to detect fraud. In recent years, they have been extensively trained with data analysis systems, which allow them to quickly sound the alarm at the first anomaly.


For more information on how to contract a Miami Private Investigator, contact Universal Investigations Agency, Inc. today at (954) 305-6275

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By Victor Elbeze Lead Investigator & Owner of UniversalInvestigations Agency, Inc.

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