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Out of 102 cases of $1 million-plus thefts from businesses, accounting and finance professionals were the chief culprits, report finds.
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Accountants and finance staff stole more than $130 million from their employers over the past decade, according to research from forensic accounting and corporate investigations firm Warfield and Associates.
The analysis found that those in finance positions were responsible for 43 of the 102 cases of $1 million-plus thefts, amounting to a total of $132,895,000.
Chief culprits were accountants, bookkeepers and accounts managers.
Of the 43 fraudulent finance employees, 21 were motivated by a luxury lifestyle, 14 were gamblers and eight had a combination of factors.
The most common method of defrauding businesses was sending fund transfers to their own bank or the bank accountant of someone close to them. Across all 102 cases of $1 million-plus theft, 38 used misdirected EFTS followed by false invoicing on 26 occasions.
However, the biggest hauls used false accounting and cash theft, reaping $10,350,000 on average.
All told, businesses lost more than $350 million to fraud over the decade to August 2022, with the largest amount stolen by a single worker amounting to $27.4 million.
The research found that the majority of swindling was conducted over periods of five years or more, with just seven committed in less than six months.
The longest period a fraud went undetected was 17 years and involved $3.7 million being stolen from a manufacturing company. The quickest swindle took just four days to obtain over $1 million.
“The length of time that many of the frauds lasted was very concerning. Fraud can occur at any organisation,” said Brett Warfield, principal at Warfield and Associates.
“However, if the fraud is not being identified relatively quickly, then the organisation should ask why?
“Where were the failures in governance, audit and whistleblowing protocols that allowed the fraud to occur.”
The firm’s research found that one of the most effective ways to mitigate the risk of fraud was to educate staff, highlighting the warning signs.
Frauds were uncovered thanks to a bank notifying a business of irregularities, or scrutiny by an external bookkeeper after a company experienced poor cash flow.
Warfield and Associates said businesses needed to be aware of fraudulent activity and routinely review business functions and roles to ensure positions that would make it easy to steal from the firm were segregated.
The research conducted by Warfield and Associates included 102 cases of fraud that had court reports outlining the activity and met its further criteria of the following:
The firm has conducted seven major fraud studies since 2008, including gambling-motivated fraud in Australia, and employee fraud in Australian financial institutions, with the report on million-dollar employee fraud in Australia the most recent.
AUTHOR
Josh Needs is a journalist at Accountants Daily and SMSF Adviser, which are the leading sources of news, strategy, and educational content for professionals in the accounting and SMSF sectors.
Josh studied journalism at the University of NSW and previously wrote news, feature articles and video reviews for Unsealed 4×4, a specialist offroad motoring website. Since joining the Momentum Media Team in 2022, Josh has written for Accountants Daily and SMSF Adviser.
You can email Josh on: This email address is being protected from spambots. You need JavaScript enabled to view it.
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