Top 10 Red Flag Warnings of Fraud

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How prepared are you to detect fraud if it slips through the cracks, or even detect fraudulent activity?

All organizations are at risk of fraud, each with its own way of preventing it such as implementing specific policies, procedures, programs and training. However, preventive measures cannot guarantee that fraud will not be committed.

Fraudulent acts by individuals can negatively impact the company’s reputation and incur significant legal costs, and lead to incarceration, not to mention the downfall of the entire organization.

As an accounting professional, an important aspect of your job is to identify fraud during an audit. To help accounting professionals detect fraud, we’ve listed the Top 10 red flag warning signs of fraud below. While one of these may not necessarily be cause for concern, the presence of two or more should raise suspicion and may require a more in-depth examination:

  1. Missing Documents -- It isn’t uncommon for documents to go missing in the workplace. After all, accidents do happen. However, if this becomes a frequent occurrence, fraudulent acts could be the culprit, especially for checks. Missing checks numbers or gaps in reconciled check numbers can also be an indicator of fraud.
  2. Complaints -- It’s easy to write off complaints as nonsense venting, but complaints are one of the best ways to identify fraud. If employees are complaining about something, don’t take it lightly. Dig further into the situation to identify the cause of the complaint and what else could be behind it.
  3. Excess Purchases -- Fake payees can be used to convert funds. Be aware of excessive purchases as they could be covering a possible payoff of a purchasing agent.

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About Jodi Chavez

Jodi Chavez

Jodi Chavez is President of Randstad Professionals. With more than 17 years in the staffing industry, Jodi oversees the field organization and provides direction for Randstad’s finance and accounting, human resources, sales and marketing, and legal staffing capabilities. Throughout her career, Jodi's entrepreneurial drive and strong business acumen have led to increased revenues, gross profit growth and improved ROI. Along with a proven track record of building high performing teams, she brings a wealth of knowledge in strategic planning and execution, mergers and acquisitions, brand strategy, social media and multi-generational leadership.


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Dec 30th 2016 09:38

Really Informative! Fake company also cheat people in many ways. Detection and prevention of fraud is really important. I got information to a investigation Firm Colt Ledger before investment in a startup company.

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Jun 30th 2018 23:07

Love this post! Very informative.

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Jun 30th 2018 23:09

Loved this post! Very informative and great points to memo.

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