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SA Business Fraud just the tip of the iceberg
21 September 2021 | Minutes to read: 3

SA Business Fraud just the tip of the iceberg

By William Buck

South Australian businesses are being hit hard by fraud with two high-profile cases just the tip of the iceberg, according to a leading Adelaide auditor.

While fraud cases involving the Adelaide companies captured the headlines recently, accounting and advisory firm William Buck says it’s not just the top end of town being targeted.

William Buck’s Director Audit and Assurance Grant Martinella says there’s likely a high level of fraud that goes undetected or unreported in small-to-medium enterprises right across the state.

“Everyday businesses across the state are being skimmed by fraudsters within and outside their walls,” Mr Martinella said.

“SMEs are often at greater risk because in many cases individuals have high level access to the accounts and work under limited, or no, supervision.

“SMEs may also lack the internal monitoring systems to detect fraud.

“When there aren’t checks and balances it can be tempting for an employee who manages payments to add to an annual leave balance and cash it out or simply slip a fake invoice into the payment system.

“Fraud is much harder to detect when the theft is small amounts over a long period of time.”

William Buck is seeing another rising threat from external hackers who have developed insidious tactics that are chilling in their sophistication.

“Once in the company’s computer system the hacker monitors emails for months before launching an attack,” said Mr Martinella.

“In some cases they may mimic a supplier to send a bogus invoice to the target business with payment details that link to an overseas bank account.

“We’ve also seen CEOs and CFOs being impersonated by these hackers who even perfect their tone and style in an email. The deception’s led to six figure losses for some companies.”

Mr Martinella said many business owners when confronted with evidence of fraud are embarrassed they’ve been fooled by a trusted employee.

“It’s this embarrassment and a fear of reputational damage that often holds them back from reporting the fraud.”

Minimising risk

While preventing external fraud attacks is about educating employees and ensuring adequate controls exist, there are warning signs employers need to know when it comes to deception from within.

“Employees who are reluctant to delegate tasks such as processing payments, or who are doing a lot of unnecessary work out-of-hours may be a red flag,” said Mr Martinella.

“Another warning sign could be an employee who is reticent to take their annual leave entitlements. They may fear their fraud will be exposed in their absence.

“Having more than one staff member responsible for processing payments and payroll or making dual signatures mandatory on all transactions is a good start to preventing fraud.

“The accounts of suppliers and employee records should also be checked regularly to ensure they actually exist and are correct.

“Regular audits are vital. At William Buck we use measures such as Data Mining which can analyse a large volume of data to detect any anomalies or unusual trends right across the business.

“Those who commit fraud are constantly developing more intelligent ways to hide their deception. It’s vital to stay one step ahead by having thorough checks and balances and regular audits to guard against threats from outside and inside your business.”

Workforce warning signs

  • Employees who are reluctant to delegate financial tasks
  • Employees unnecessarily working long hours
  • Employees who don’t take annual leave
  • Changes in lifestyle / behaviour

Tips for managing fraud risk

  • Dual signatures on payments
  • Regular (monthly) internal audits of accounts and HR records
  • Engage a Data Mining service
  • Critically assess your internal control environment

For more insights on how to detect and prevent employee fraud, please read our article How to detect and prevent employee fraud in the ‘new normal’

About William Buck

William Buck is a leading firm of Accountants and Advisors with a proud reputation for delivering value and results to our clients for 125 years. With offices in Sydney, Melbourne, Brisbane, Adelaide, Perth and Auckland, William Buck has more than 100 Directors and 900 professional staff. As the largest locally owned and operated firm in SA, the Adelaide Office of William Buck has 24 Directors and over 190 staff. William Buck is also a member of Praxity, the largest and fastest-growing alliance of independent accountancy and consulting firms worldwide.


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