These 10 red flags may indicate fraud


All organisations 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.

So says Jodi Chavez, Senior Vice President for recruitment firm Accounting Principals, in an article on Accounting Web.

Chavez says an important part of an accounting professional’s job is to identify fraud during an audit.

To help accounting professionals detect fraud, she lists 10 red flag warning signs of fraud, saying that the presence of two or more should raise suspicion and may require a more in-depth examination:

– Missing Documents as a frequent occurrence

– Complaints from employees

– Excess Purchases

– Inventory Shortages where excessive shrinkage could be an indicator of fraudulent activities.

– Excessive Voids/Returned Checks which are common indications of theft.

– Duplicate Payments

– Rounded-Amount Invoices

– Abnormal Invoice Volume

– Invoices Just Under Approval Amounts

– Mail Drop Address or  ghost address: Companies using a mail drop as their address rather than a P.O. Box may be doing so to hide their fraudulent activity.

Read the full article here.