3 Fraud cases and 3 antifraud remedies.

We often talk about situations in which it is possible to check fraud and minimize the possibility of its occurrence in the future, but we do not talk about cases that are almost impossible to prevent and, most importantly, to prove:

Case # 1- representation allowance:

Representation allowance, allocated to the manager by the company for negotiations.

The sum of representation allowance was allocated to the manager in the form of cash to visit a place and conduct negotiations with a potential client, but at the end of the dinner, the client wished to pay the bill on his own and, moreover, didn’t take a receipt, but this receipt was taken by a representative of the company, who was allocated the company’s money.

Therefore, the manager was able to appropriate the money, allocated to him for visiting a restaurant with a client. In addition, the receipt confirmed the incurred costs.

Minimization methods:

Payment for representation allowance with a corporate card of the company, not cash issue at the company’s cash desk;

Case #2: kickbacks when leasing commercial real estate.

The premises of the commercial real estate were leased by the general director in such a way, that only 50% of the real income from the lease of the objects was indicated in the agreements with tenants. The other 50% were paid in cash, so the CEO of the company “put into his pocket” exactly 50% of the company’s turnover each month.

Minimization methods:

Regular monitoring of lease prices for comparable real estate objects, thus monitoring of the market prices for leasing of objects.

Carrying out a secret shopper procedure.

Case # 3: fraud at write-off rates at a manufacturing facility.

For the purpose of conducting black sales of products at a manufacturing facility, increased rates of write-off were established, therefore the difference of produced products was written off and sold for cash. The director of the facility put the money into his pocket. The write-off rates were justified by a document, received in a specialized governmental organization, which with its conclusion has confirmed this percent of the write-off rates for this type of enterprise.

Minimization methods:

Getting an alternative document on write-off rates;

Checking the reliability of the defective products by carrying out spontaneous examinations in the form of unscheduled inventory count.

P.s.: Hope this article, saves your company from losing assets.

Auditor, Fraud investigator Co-Owner, Partner, Forensic services at Crowe Erfolg Site: https://www.crowe.com/ua/croweaa Member ASIS, ACFE, ASCP Board member GS