Fraud: Warning Signs
The Accounts Payable department is particularly susceptible to fraud.
The examples given below do not necessarily mean that a fraud is being perpetrated, but they may ring warning bells and warrant further investigation.
- Unclear reasons for particular supplies or few details concerning the service provided
- Suppliers not generally known to staff, not handled in the normal way, or dealt with exclusively by a director or manager
- Suppliers with PO Box addresses, accommodation addresses, residential addresses, the same address as another supplier, as an employee or his next of kin
- Invoices which are soiled, incomplete, on odd-sized paper, or altered in some way
- Unfolded invoices (that have not been in the mail)
- Invoices from various suppliers on similar stationery
- Corporate suppliers with no registered number, using accommodation address or offshore address
- Supplier has incorrect vat number
- Large number of invoices for a particular supplier just beneath approval thresholds
- Numerous contras or other adjustments on purchase ledger
- Numerous entries in suspense accounts during the year
- Supplier does not offer usual discounts or terms
The risk of fraud is increased where there are:
- weak account opening procedures
- weak controls over amendments to standing data
- poor control over dormant supplier accounts
- poor control over paid invoices; and
- there are no zero-based budgets or clearly defined budget holders for particular accounts.
