Fraudulent Transactions Detection Methods Crucial for New Zealand Businesses

Detecting fraudulent transactions early on is essential for businesses in New Zealand to prevent financial losses and maintain their reputation. According to experts, there are numerous red flags that can indicate potential fraud, and being aware of these signs can help organizations take preventative measures.

Common Red Flags of Fraudulent Activity

In a recent investigation into fraud cases, investigators identified 15 common themes or “red flags” that may signal fraudulent activity. While the presence of one or two red flags does not necessarily mean fraud is occurring, it is essential for businesses to investigate further to prevent potential losses.

• Unusually close relationships between employees and suppliers: Be wary of suspicious ties between employees and suppliers.
• Recurring transactions with a particular supplier without apparent reason: Regular payments to the same supplier without justification may indicate fraudulent activity.
• Unprofessional “manufactured” manual invoices: Manual invoices that appear unprofessional or manufactured may be a sign of fraud.
• Insufficient knowledge of suppliers among finance or senior staff: Lack of awareness about suppliers among key personnel may indicate suspicious activities.
• Common contact details and bank account numbers among multiple suppliers and/or employees: Shared contact information and bank accounts may indicate fraudulent activity.
• Lack of supporting documentation for payments: Inadequate documentation for payments may be a red flag.

Additional red flags include:

• An overly dominant management team
• Annual leave not taken
• Working excessively long hours
• Significant changes in employee attitude and behavior
• Unexplained lifestyle changes

Effective Fraud Prevention Methods

Experts stress that having adequate fraud prevention methods in place is crucial to prevent fraudulent transactions. These measures include:

• Implementing strong internal controls
• Documenting a Code of Conduct and ethics policies
• Conducting regular fraud risk assessments
• Setting a positive “tone from the top”

Fraud Detection Methods

However, even with effective prevention methods, it is still possible for fraudulent activity to occur. Therefore, it is essential for businesses to have adequate fraud detection methods in place as well. These methods include:

• Having a whistleblower hotline
• Implementing regular fraud detection data analytics programs
• Providing regular fraud awareness training to employees

Tips for Fraud Detection

According to the 2014 Association of Certified Fraud Examiners Report to the Nations, tips are still the most common method of fraud detection, with over 40% of all cases being detected by a tip. Employees account for nearly half of all tips that lead to the discovery of a fraud.

Contact Information

If you suspect your business may be a victim of fraud or would like to discuss how to avoid becoming a victim, please contact:

• David Seath
• Lorinda Kelly