The fraud investigation attorneys at Azrael, Franz, Schwab & Lipowitz explain the areas of a business where fraud commonly occurs and what exactly to look for. 

Fraud: the five-letter word that keeps business owners awake at night. According to Business News Daily, companies lose an estimated 5 percent of their annual revenue due to fraudulent activities by employees, managers, owners and executives.

Fraud detection and prevention should be a continuous initiative for small and large businesses alike. The attorneys at Azrael Franz specify which areas within a business to assess and what to look for when searching for corporate fraudulent activity.

1. Complaints – It is possible that fraudulent activity is near when complaints are received from employees, clients or customers. Complaints may serve as one of the primary indicators that fraudulent activity has occurred.
2. Stale reconciliations – In bank reconciliations, missing deposits or checks could be indicative of theft and/or wrongdoing.
3. Common names for refunds – Continuously cross check the names and addresses that frequently appear for refunds. Sales employees can make false refunds to customers for merchandise and disburse the refund their own address, or to another party involved.
4. Numerous voids – Voided sales slips could indicate that there was an attempted sale, but payment was diverted to individual committing fraud. Often, perpetrators of fraud will use voided sales as a way of covering a theft.
5. Excessive credit memos – Similar to excessive numbers of voided transactions, this technique can be used to cover theft of cash. A credit memo may be written to a false customer. The cash value of the fake transaction is then taken out by the perpetrator to make total cash balance.
6. Increased reconciliations – Stolen deposits and bad checks are not always removed or covered from the reconciliation. Over a period of time, if fraud is occurring, the increase in the number of reconciliations made will become apparent.
7. Excess purchases – When more purchases are completed than usual, it may be to cover up fictitious customers that are used to convert frauds or to reimburse a buying agent.
8. Employee expense accounts – Employees may conceal fraudulent activity in their individual expense account reimbursements. It is important that reimbursements be scrutinized carefully to ensure that expenses are suitable to the scope of an individual’s position in the company.
9. Write-off of accounts receivable – Compare the write-off of receivables by customers as it could lead to information that an employee has tempered with customer payments.
10. Post office boxes as shipping addresses – Check where merchandise is shipped to. If shipped to a post office box, it is possible that an employee is shipping to a bad purchaser.

The attorneys at Azrael Franz have been reigning in corporate fraud throughout the United States for many years. Intense research, a detailed litigation blueprint and vigorous prosecution of fraud claims have resulted in substantial monetary recovery for Azrael Franz clients and has acted as a compelling deterrent to future fraud in industries in which the firm has litigated. Azrael Franz has taken on industry giants as well as smaller corporations with outstanding success in the healthcare, manufacturing, banking, retail and computer industries.

If you believe that your corporation may have been defrauded, Azrael Franz will counsel you on recouping your losses. Contact Keith S. Franz or Jonathan A. Azrael to investigate further.