Company Fraud

Company fraud can be disastrous for any company and its employees. It can be difficult to detect and can carry on until the situation is beyond repair. Corporate fraud can cause bankruptcy, unemployment and may even result in court cases and imprisonment.

What is Company Fraud?

Company fraud – otherwise known as corporate fraud – covers a range of illegal or dishonest activities performed by an organisation or by individuals within the organisation.

These activities are carried out in order to gain an unfair advantage for either the individual or the company as a whole.

Company fraud can often carry on for a long period of time without detection. The cases are often complex and can be extremely damaging to the business, employees and people outside of the business.

Company Fraud Weak Spots

There are many ways in which fraud can be committed within a business. The biggest weak spot in an organisation is the accountancy and finance department. Access to cheques, online banking passwords and accounting books all offer opportunities to would-be fraudsters.

There are other people who could possibly commit fraud outside the accountancy department, but businesses need to do their best to ensure honesty, transparency and trust in this section of the organisation as well as implement watertight processes and regular audits.

Examples of Company Fraud

Most types of fraud fall under asset misappropriation – this is where an individual steals or exploits the company’s resources.

Financial statement fraud is a less common type than asset misappropriation but usually more damaging. This is the act of missing out or inputting misleading information on the company books. Not disclosing debts, making up revenues and inflating assets can have a calamitous effect on a company – taking them in a direction that they are not financially capable of.

Here are a few examples of company fraud that can start off small, but quickly escalate:

Payroll Fraud

The bigger the organisation, the easier it is to commit payroll fraud. Methods for this type of fraud include logging in more hours than you have worked and declaring extra overtime that hasn’t been fulfilled. This can be easily overlooked because these discrepancies will often be a tiny percentage of the overall figure. It is the payroll department’s responsibility to do quarterly or even monthly checks.

Double Cheque Fraud

In terms of company fraud, double cheque fraud is one of the most common. This is when the bookkeeper writes a cheque to a legitimate organisation – a utility company for example – for £250 and then writes a cheque to themselves but logs that cheque in the system as a utility bill cheque.

Stock Fraud

Stock fraud can also be another way of committing fraud. There are different variations on this, but a common method is over-ordering stock and then returning the surplus for some kind of credit, like a gift card. This gift card can then be used to buy something fairly small, and then the individual benefits by receiving cash as change for the purchase.

These are all examples that are hard to detect and can run up huge amounts of stolen company money.

Sometimes, fraud can only be spotted when someone takes over the role and realises the lack of reconciliation on the account.

How DPP Business & Tax can help with company fraud cases

The problem with fraud within a company is that it can implicate innocent parties, or be the result of genuine oversights. If you are involved in a company fraud investigation at your workplace, the first thing you need to do is seek legal advice straight away.

DBT & Partners have years of experience dealing with corporate fraud cases, supporting individuals and organisations. We’ve supplied legal representation in lengthy, complex investigations and we make sure our highly trained expert fraud solicitors are on hand to provide expert advice, support and counsel.

For help with anything regarding company fraud, contact us – one of our expert tax solicitors will be in touch as soon as possible.