Fraud can be defined as the act of intentionally adjusting a company’s financial paperwork to receive an unlawful or unfair benefit for a person or business. This white-collar crime can be challenging to detect, especially if you are not familiar with financial statements or the transactions of the company in question. Here are three signs of potential business fraud.
1. The Presence of Suspicious Monetary Transactions
Suspicious activity on the company’s financials can include:
- Identical payments from different customers
- Unusually high amounts of cash transactions
- Payments to or from unknown payees or companies
Often, regular audits can be enough to uncover signs of suspicious financial activity before a substantial amount of harm can be done. However, sometimes it takes further investigations and enforcement Irvine CA to expose any wrongdoing.
2. Resistance to More Controls
Sometimes, people are simply afraid of change and worry that more internal controls will lead to more work. But resistance to internal audits and more rules can also come from a place of wanting to hide something. It might be helpful to talk to employees who are resistant to change and try to find the real reason why they feel this way.
3. Unusual Behavior
There can also be other signs of unusual employee behavior that may lead a business owner to suspect fraud within the company. Some of these behaviors might be:
- Refusing to share or receive assistance with particular assignments
- Only working with a few select suppliers
- Frequently asking to work extra hours, particularly when they will be alone in the office
While these behaviors may not be suspicious on their own, if they are coupled with other signs of fraud, then they might be worth looking into.
If you are a business owner or have a higher-level position in a company, be aware of these signs of potential fraud.