What is Fraud? And Who is at Risk? ‘Fraud involves a person dishonestly and deliberately deceiving a victim for personal gain of property or money’ The concept of fraud has been around forever, but the ways in which it is being carried out have developed drastically over recent years with the increase in the use of technology in day-to-day operations. According to the office of national statistics, 8% of the victims of fraud are those who are in managerial and professional roles due to the importance and responsibilities these positions hold. Within that 8%, the most vulnerable are recent business ventures (as the fraudsters tend to target the inexperienced) and growth focused individuals as these maximise the opportunity for fraudsters to make a quick quid. What are the Common Things to be Aware of About Fraud? Every company is run in a different way, so there is no mechanised way of identifying how to tackle the prevention of fraud. Investing time into becoming aware of the existence and risks that an attack could have on a company’s financial situation could prove onerous and costly. However, there are some preventative measures and procedures that we can all implement:

• Fraudulent invoicing; False invoice scams occur when you receive an invoice from somebody who is looking for some form of payment. The request for payment may appear to come from an existing creditor’s email address, when in fact it is just a fraudster using the same or similar email to deceive you. The invoice could say that your payment is urgently needed, or could be threatening you that not paying will affect your credit rating. If a client randomly asks for a large lump sum, this should be investigated along with any other general suspicious requests. 
• Identity Fraud; This could occur in numerous ways, cloning corporate credit cards, ordering assets in your company’s name or illegally accessing your financial bank accounts. Any out of the ordinary expenses should be investigated. An urgent demand for payment by a senior member of staff should be double checked by ringing the person to confirm.
• Supplier bank detail changes; Fraudsters can often contact a client and request a change of bank details. If these are not double checked then bank payments can be processed to the wrong account.
• Fictitious refunds; This happens when an employee puts through a transaction as a refund for a service or product when there isn’t anything to be refunded. This requires employees to stay vigilant and ensure all requests for refunded material, services or products are legitimate.
• Over the phone; A popular yet easily preventable fraud is when you are called up by a scammer claiming to be a known company and you are asked for account details. The most common calls are fake HMRC or creditors’ claims, saying that you are due a tax refund or due a credit on an invoice. It Is widely accepted that you should not give out your secured details on the phone. If it is requested then you should call the organisation back, or ask the caller for classified information to ascertain their employment and position within the business in question.

How to Protect Your Business and How to Report It  If you detect or suspect any type of fraud, the National Fraud Intelligence Bureau (NFIB) is the UK’s main governmental centre for dealing with fraudulent activity. You can contact them at http://www.actionfraud.police.uk/report-a-fraud/how-to-report-a-fraud . You can take internal control of the situation by:

• Ensuring physical security of assets. It is suggested that you lock all your buildings and office supplies securely after hours.
• To better detect fraud, it is imperative that your company knows its customers, so it can efficiently detect fraudulent requests or abnormal invoices and transactions from them. Reconciling your accounts on a consistent basis will increase the chances of fraud being detected.
• Making the dangers of fraud and how it happens known within your company to effectively identify the activity and resolve it as soon as possible.
• Internal technological controls i.e. the use of security passwords and software to restrict availability of information to relevant employees to prohibit unauthorised access. These passwords should be routinely forced to be changed by the electronic system. Other strategies such as anti-virus software could go a long way in protecting your business.
• Segregation of duties: Where possible in SMEs do not have the same people responsible for similar areas such as purchase ledger and bank payments or sales ledger and bank receipts. Electronic bank payments should be segregated between data entry, authoriser and payer with properly authorised invoices available at each stage.

It is your business; therefore, it is your responsibility to protect against and report any fraudulent activity. Hopefully this brief guide has enlightened you to the risks of fraud to your company and how you can prevent some of it from happening. With the attacks of fraud on the rise it is important that the situation is acknowledged and action is taken. It is easy to report fraud and easy to take measures to prevent it.   The S4B Team   S4B are a firm of Chartered Accountants in Maidenhead. We can help you ensure that you are fully compliant and up to date with the latest accounting software and accounting procedures to protect your business. Please contact us to see how we can help your business at [email protected] or call us on 01628 623444.