ArticleImage 31000 Feature - Fraudulent employees ripping off millions: report

Fraudulent Australian workers are ripping off millions of dollars from their employers, with one woman stealing $45 million, new research shows.

A report by forensic accounting firm Warfield and Associates has revealed that over the past 12 years, workers convicted of fraud have stolen almost $400 million from their employers.
The report’s author, forensic accountant Brett Warfield, said the banking sector is the easiest target and accountants and bookkeepers are the worst offenders.
‚ ≤They have direct access to money and I think that’s where there is a lot of trust in that area,’ he said.
In one case, a woman stole $45 million from her employer to fund a lavish lifestyle.’

‚ ≤Incredible sums’

‚ ≤The sums of money that were stolen from some of the organisations were incredible, with nine cases involving more than $10 million,’ Warfield said.
The most common method of theft was through electronic funds transfer, where employees simply transferred cash into their own accounts.
‚ ≤The ease with which perpetrators in many organisations used the electronic funds transfer system to simply credit their own bank accounts is very concerning,’ Warfield said.
‚ ≤We see EFT fraud as one of the major fraud issues of this decade.’
Warfield said the report reveals evidence of major governance weaknesses in some of Australia’s largest organisations.

Warning sign

‚ ≤This is a warning sign to other organisations, so that they can learn from the mistakes of others, making sure that there’s effective internal controls and supervision of people and regular internal audits to get in and ask the hard questions and hopefully improve the governance of their organisations,’ he said.

Key findings

The key findings of the research include:

  • 89 cases were identified involving 93 employees.
  • 66 of the 93 perpetrators were male and 27 were female.
  • Perpetrators ranged in age from 24 to 67 years old.
  • At least seven perpetrators had prior criminal histories for deception related offences.
  • $398 million was stolen.
  • Nine cases involved at least $10 million being stolen.
  • The largest amount stolen by an employee was $45.3 million.
  • The banking sector was the hardest hit with 30 frauds. This was more than a third of all cases.
  • Every person included in this research was sentenced to a gaol term.
  • In two cases, offenders received a gaol sentence of only six months non-parole.
  • Gambling addiction was the main motivatingfactor in 46 of the cases. This is more than half the cases in the research.
  • 43 cases involved employees transferring some,or all, of the fraudulently obtained funds to their own bank accounts by Electronic Funds Transfer. With cheques being phased out by businesses, more Electronic Funds Transfer crime will occur in the future.
  • Victoria had more than one-third of all frauds yet New South Wales incurred the biggest losses totalling $153 million.
  • Accountants and bookkeepers were the most prevalent job titles of the perpetrators.
  • Of the 62 employees who committed fraud against organisations other than banks, 38 were employed in the finance department.
  • Only nine of the cases involved collusion with another person or persons.
  • 40 of the frauds took more than five years to discover.
  • In many cases it is clear that a forensic audit of key areas would have prevented frauds from continuing.

Slow to discover

The duration of time taken to discover frauds should be of real concern to those responsible for governance in their organisations, according to the report.

The report noted:

‚ ≤No organisation can completely stop fraud from happening. However, a number of these organisations had large frauds occurring that were not discovered by their internal controls and reviews over what can only be regarded as an incomprehensible period of time.’

Red flags

The report concluded:

‚ ≤It is clear that educating staff about the warning signs of fraud and basic fraud risk mitigation strategies have been absent in most cases.

Training staff in what to look for and identifying the Red Flags‚ π of fraud is an invaluable fraud mitigation and detection tool. All organisations, regardless of size, should consider fraud awareness training.’

Source: as shown on http://www.workplaceinfo.com.au