What are the common warning signs of fraudulent behaviour that a Forensic Accountant looks for? (Part 2)

Continuing on from part 1 of this topic, 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:

  • Review a sample of invoices that the company has issued. Are the invoices tax compliant? That is, do they have the organisation’s Australian Business Number on the invoice, and do the words “Tax Invoice” clearly appear on the invoice. Also check that the GST on the invoice is clearly shown on the invoice or words to the effect that GST has been included in the total value of the goods or services provided
  • Be particularly mindful, if there are large amounts of cash either entering, leaving or being held on the business (e.g. in the company’s safe). Is the business being used to launder illegitimate money or is the business being used to finance some other business?
  • If in doubt seek professional advice. Be particularly careful, if you are rushed into making a decision, or there is any resistance raised when you start to investigate a business or perform a due diligence.
  • Many simple searches can be quickly and simply performed on the internet. For example the NSW Land Title Office can be searched to check if a company or individual owns any property. An Electoral Roll search (Adult Population Index Search) can be used to confirm an individuals personal details.
  • Don’t take anything at face value. Ask to see bank and trade vendor references. Talk to the accountant, the neighbours, or anybody who has anything to do with the business.

Rushmore (Author)

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