Despite what many business owners would like to believe, instances of fraud often crop up when we least expect. Even the best of us can miss the signs of a fraudster in our midst, and as the size of a company increases, so do number of places a fraudster can hide.
In The News
The snack food manufacturer, Utz Quality Food, Inc. hit the news after discovering a $1.4 million fraud scam perpetrated by a former employee and vendor. The fraudsters worked as partners over a period of several years and forged over 120 fake invoices and purchase orders for products and services that were never received.
What Kind of Fraud is This?
This type of fraud, also known as a billing scheme, is all too common in both for-profit companies and nonprofits.
This scheme often involves an employee submitting false documents like purchase orders or invoices. These false documents may come from a fake or real company. In the Utz case, the purchase orders were being sent from a fraudster at a legitimate vendor to his partner in crime at Utz, who was approving the fraudulent orders and sharing in the stolen funds.
How Do I Stop It From Happening to My Company?
The key to preventing a billing scheme lies in the strength of your company’s internal controls and careful review of your financial documents.
To help narrow the chances of fraud in your organization, you can take the following preventive steps.
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Review your list of vendors on a regular basis. This will give you a fighting chance when it comes to spotting any unusual additions to your normal line-up.
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Ensure that any large or unusual purchases are approved by multiple employees. In the Utz case, the employee was responsible for approving the invoices that he had a hand in fraudulently producing. By adding an extra employee or employees in the approval process, you’ll have fraudsters thinking twice about trying to cash in on your business.
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Pay attention to the invoices you’re approving. Remember, a keen eye when reviewing invoices is not only a fraud prevention strategy but also good business.
What if I Suspect Fraud in My Organization?
If you suspect fraud in your organization, you’ll want to sit down with a fraud expert as soon as possible. When it comes to suspected fraud, you want a seasoned investigator who has the expertise and knowledge to spot a fraudster and, if needed, help prosecute them.
Need Help?
Contact us online or call 800.899.4623. Our Certified Fraud Examiners are here to help.
