Key points to remember when dealing with people in business
Key points to keep in mind when dealing with people in business:
- Be particularly careful if you are approached by someone, rather than you being recommended to the person by someone you trust.
- Doing business in an overseas country makes you vulnerable to fraudsters and scammers.
- If it sounds too good to be true it probably is!
- Ask to be taken around the business, and meet the staff. Be on alert if you only ever deal with one person in “the company” – maybe that’s all there is!
- Keep asking questions and checking the facts.
- Something as simple as an email address that does not work could be a clue that you are dealing with a fraudster
Always seek the advice of an expert Forensic Accountant. An expert Forensic Accountant can help you assess the situation and even recover money that you have invested.
Who is a typical fraudster?
So who is a typical fraudster?
Research indicates that the typical corporate fraudster is:
- Male
- Well liked and respected
- Greedy
- Has pressing financial need e.g. has a gambling or drug problem
- University educated
- Close relationship with suppliers; and
- Hardworking.
But don’t be fooled by people who don’t fit this stereotype! Don’t trust a person just because they are older, are female, appear to be wealthy, are well dressed, operate from an exclusive address, or promise you something of value. Notably, people that commit fraud understand human emotions and how to manipulate them.
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.
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.