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4 Types of Fraud that Could Ruin Your Business:

Occupational fraud is estimated to affect at least 1 in 2 small business owners over their business lifecycle. That means that if you were to have two entrepreneurs sitting in front of you, it’s likely that one, if not both, have experienced some form of fraud while developing their businesses.

That’s a scary notion.

According to a report published by the Association of Certified Fraud Examiners, occupational fraud is still on the increase and, as such, all businesses regardless of their size, should be more vigilant when it comes to hiring new employees… especially, as it turns out, when you’re looking to hire accountants and bookkeepers.

You can read the occupational fraud report here – reports are released biennially, so we can expect to see an updated record toward the end of this year.

With that, let’s take a look at the 4 main types of occupational fraud that could affect your business, and the reasons behind them:

1) Over-ordering

Procurement, especially in larger companies, is a fantastic place for a potential fraud to siphon off a few extra bucks and most of the time they get away with it too. Fraud associated with over-ordering generally boils down to one simple notion – your procurement executive or associated agent would purchase office or related business supplies on your behalf and purposefully order too much. It would not be enough to raise any eyebrows, but it would be enough to allow them to stock up on the surplus, and when it reaches a “good” point, they simply return the items to the store in exchange for cash or vouchers.

This type of fraud generally goes unnoticed because, on the whole, nothing would seem out of place when it came to looking over the paperwork.

“Sure, we ordered some files, some pens, and a load of paper… $500 looks about right – dismissed!”

Wrong. You only needed to spend around $300 and the rest went straight into your procurement officer’s pocket.

2) Double-Billing

Double-Billing is the act of paying a certain bill or invoice twice, under the same account name or account codes, where one payment is made to the actual vendor and another, separate payment is illegally made to your bookkeeper.

For example, you receive monthly invoices from a Social Media company, who run your Facebook, Twitter and LinkedIn advertising campaigns, at a cost of around $200 per month. When the bill arrives, your bookkeeper initiates a payment to the Social Media Company and logs it in your accounting software as “SMC payment” or something similar. At the same time, s/he makes a $50 payment to his or her own bank account, using the same “SMC payment” notation on the accounting software.

When it comes to looking over figures, everything seems legit because everything’s being paid to the Social Media Company… it’s only on closer inspection that you’d find every second payment was made to another account… your bookkeeper’s.

3) Payroll Fraud

Payroll fraud is perhaps the most common and most expensive type of fraud to hit businesses across the globe. The more money your business turns over, the “easier” it is to hide any overpayments or falsely logged hours because the discrepancies, or overpayments, generally amount to a very small percentage of the annual figures.

For example: You work as a Tradie, laying bricks all day for a multi-million dollar construction company with over 5,000 staff. One day you accidentally log more hours than you actually worked, which you only realise when you receive your payslip. Now you try it again and add a few more hours, this time pushing you into “overtime.” Your payslip arrives and the extra money’s there. Now you do this every time you log your hours, resulting in you earning 50% more per year than you’d usually make, and nobody even noticed.

This is incredibly common and happens as a result of not comparing the payroll accounts to employees’ timesheets.

4) Trust-related Fraud.

Hiring someone, who you believe to be hard-working, motivated and honest, only to find out a year later that they weren’t who they said they were can be an incredibly difficult pill to swallow – the consequences are often financial strain, emotional distress and a new-found inability to trust.

One example of a very expensive mistake, following a misguided decision to employee somebody, resulted in a reputable engineering firm being closed down, 15 members of staff losing their jobs and the associated board going bankrupt.


Because the lady that was hired to run the firm’s books was secretly sending all of company’s tax payments to her own bank account, instead of the tax office.

A simple, professional background check can help to lower your risks of employing a wolf in sheep’s clothing and save your business from potential fraud.

Fraud has many forms and can affect your personal life just as easily as it can ruin your business. If you’re ever in doubt, or you’d just like the reassurance that you’re making the right choice in trusting someone, ask Precise Investigation to run a professional background check and we’ll give you the answers you need.

Click here to find out more about our background checks and other related services.

Call Precise Investigation today on 1300 856 011 where one of our qualified Private Investigators will be able to give you the guidance you need.

Whether you’re in Melbourne, Sydney, Perth, Adelaide, Brisbane, Hobart or any other city in Australia, we can have an operative available and on your case at a moment’s notice.

Thank you – Image credit: EraserGirl (

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