Internal company fraud investigations
Internal company fraud investigations

The following Corporate Crime guidance note provides comprehensive and up to date legal information covering:

  • Internal company fraud investigations
  • Preliminary steps
  • Indicators of fraud
  • Fraud by a third party
  • Internal fraud investigations
  • Company fraud prevention

Preliminary steps

Before any action is taken it is important to consider:

  1. the event which has created the suspicion of fraud in the company

  2. the financial impact this has had on the company—what is the loss?

  3. when and how did this loss occur?

  4. who is responsible for this loss?

  5. is there any evidence pointing towards the involvement of the person responsible?

Carefully consider which documents may be protected by legal professional privilege. See Practice Notes: Legal professional privilege in criminal proceedings, Maintaining privilege during criminal investigations and Claiming LPP in respect of documents subject to a s 2 notice.

Indicators of fraud

There are types of behaviour which may be indicators of fraud within a company. Where internal fraud is suspected within the company in respect of an individual or team, the following indicators should be considered:

  1. have audit results been explained as errors? Are there discrepancies and unexplained items?

  2. have transactions taken place out of office hours or for unusual amounts or to irregular recipients? Are common names used and repeated on invoices?

  3. is one person responsible for the process or is it subject to internal control or other higher authority which is enforced?

  4. have documents gone missing? Is there a clear, logical sequence of correspondence between the customer/supplier and the company?

  5. are there duplicate payments, repeated credits