Case Study 2: Fraud

Dolman Bateman have experienced many fraud investigations in which the company directors or shareholders suspect employee fraud but are unable to identify the type of fraud or amounts involved. The firm has experienced other investigations where a fraud has been discovered, but the extent and different types of fraud being perpetrated was not fully understood by the directors and shareholders until Dolman Bateman’s intervention.

DB were approached by a client to investigate a suspected fraudulent transaction by the company’s bookkeeper. It was expected that the fraud was relatively small. Over the course of the investigation, it was found that the fraud had been going on for a number of years.

Dolman Bateman discovered disguised money transfers that in reality were paying for personal purchases including payments for holidays and house repairs, as well as payments to a relative of the bookkeeper.

The most common types of employee fraud Dolman Bateman have discovered in recent times include:

  1. An employee obtaining access to internet banking passwords and transferring funds to their own account.
  2. Collusion between an employee and external suppliers of goods or services to provide inflated or false invoices for goods or services not actually supplied.
  3. Bank takings stolen by employees and not recorded in the books.
  4. Fraudulent signatures on cheques.
  5. Inventory stolen and inventory records deleted from the company’s computer system.

In the case mentioned above, the extent of the fraud amounted to $700,000. With the assistance of private investigators, Dolman Bateman obtained a confession from the bookkeeper. Dolman Bateman also enabled the recovery of a portion of the stolen funds, however, a large proportion was considered unrecoverable.

While a tremendous setback for the company, the cashflows to the business were rectified. The client instigated a series of policy changes to ensure that future fraudulent activity was minimised or eradicated.