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Checking up on the details

Member: Nifa

According to research carried out last year, the construction industry was deliberately targeted by criminals perpetrating invoice fraud and one firm lost a staggering £1.1m this way, although the losses on average ranged between £95,000 and £160,000.  Evidently, incurring such losses is hugely damaging to businesses and may even lead to insolvency for some firms, so they should adopt some checks and balances to prevent fraud of this nature.

One of these could be to engage forensic accountants, who could look through the financial paperwork to ensure that suppliers are not duplicating invoices, one of the most common scams.  They can also be brought in after the event to find out where the money has gone, as in some cases, criminals can intercept invoices and ‘doctor’ them – in a highly sophisticated manner, of course. However, the forensic accountants will be able to trace the money.

Another way that forensic accountants can assist with invoices is to check that everything that should have been invoiced actually has, which may seem obvious but it’s surprising how many suppliers fail to invoice for goods or services sold or invoice inaccurately, charging too much or too little for their supplies.  Earlier this year, most of the major supermarkets called a truce on their use of forensic accountants after the Groceries’ Code Adjudicator (GCA) found that supermarkets and other food retailers have been using forensic accountants to examine emails up to six years old in an attempt to claim payments that could run into millions of pounds.

The bottom line is that if there is money to found, forensic accountants will find it, whether it be too much or too little, and with profit margins remaining tight for small firms, it would be advisable for them to keep a careful eye on every transaction.

Author: Roger Isaacs, 2 September 2014

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