What are the common warning signs of fraudulent behaviour that a Forensic Accountant looks for? (Part 1)

Listed below are a number of factors that should be considered when assessing whether a business is legitimate or not. If a business fails any of the following tests then you are potentially dealing with a fraudulent company or person:

  • The letterhead has been typed on a personal computer.
  • The wording in an email or document has grammatical errors or spelling mistakes.
  • The company is not listed in the phonebook.
  • The Email address or web site address is invalid.
  • The company does not have its own bank account i.e. the bank account is in the name of an individual.
  • The company has a Post Office address and no physical address.
  • The phone number is continually engaged or diverts continually to a recorded message.
  • The business is being run as a sole trader e.g. “Joe’s Plumbing Services”, rather than a limited liability company “Joe’s Plumbing Services Pty Ltd”.
  • The business is being run from a private residence.
  • The Australian Business Number (ABN) or the Australian Company Number (ACN) is invalid or is not quoted on company stationery.
  • If the business is incorporated and uses the abbreviation “Pty Ltd”, check the Australian Securities & Investments Commission, National Names Index that the company exists, is registered, and the directors are who you think they are.
  • The business is registered in a foreign country. E.g. “KZT Telecommunications Inc.” (US company), “RTW Trading Ltd” could be an Australian public company (easily checked on the ASIC website) or maybe a UK limited liability company (which you can checked online at the UK Companies House website).

To be continued at Part 2 of article.

Rushmore (Author)

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