Verity journal

Sometimes the way people behave might suggest that they are committing a fraud.  These signs are called ‘red flags’. Although by themselves they may not be any cause for concern, a few of these together might be enough to alert you that something isn’t quite right.

‘Red Flags’ can be:

• Significant changes in behavior that you’ve noticed
• They have large personal debts or financial losses, and a desire for personal gain
• Audit findings revealed errors or irregularities
• Transactions taking place at an odd time, odd frequency, unusual amount or to uncommon recipients
• Internal controls that are not enforced, or often compromised by higher authorities
• Discrepancies in accounting records and unexplained items on reconciliations
• Missing documents, or only photocopied documents available
• Inconsistent, vague or implausible responses arising from inquiries
• Unusual discrepancies between the client’s records and confirmation replies
• Missing inventory or physical assets
• Excessive voids or credits
• Common names or addresses of payees or customers
• Alterations on documents (e.g. back dating)
• Duplications (e.g. duplicate payments)
• Collusion among employees, where there is little or no supervision
• One employee has control of a process from start to finish with no segregation of duties