Corporate Fraud Investigation | Fraud Risk Management - A Co. Awarded By The President of India (2012)

Employee fraud is always a big challenge for organizations as it can take many forms. Some of them tend to be big frauds whose impact is often devastating while some may seem small on the surface but they may also gradually corrode the foundation of the organization. Sleuths India is a reliable corporate fraud examiner and can help investigate any type of fraud.

Employee fraud can happen in one of these way, including:
• Cases where an employee deliberately accepts bribery, kickbacks or commissions from vendors or supplier, or from any third party supplying the raw material to the organization.
• Cases where an employee is running a parallel business, or running the same type of business and using the same customer base.
• Misappropriation of funds in a systematic manner where payments are collected from parties and the money is deposited into own accounts.
• Cases where an employee in engaged in dual employment and selling products or services of other companies.
• Deliberately purchasing low quality product from vendor with the intention to earn money.
• Setting up a fake supplier account and then billing the company for goods and services not offered.
• Secretly creating a vendor company of own with the view to deliver raw materials to the organization.
• Creating forged receipts and claiming expense reimbursement, or claiming inflated expense or double claiming for expenses.
• Committing cheating related to cheque forgery, cheque tampering, or being involved in the theft of cash or inventory.
• Showing deliberate favouritism in supply of raw products or raw materials to only selected distributors or customers in lieu of commission.
• Doing procurement fraud by over-ordering product and then pocketing the refund.
• Using company funds for own purchases and passing it off as legitimate business expenses.
• Demanding money to release funds, clear dues or make payments employees or vendors.
• Intentionally passing on information to business competitors to harm the interest and goodwill of own organization, sometimes for monetary reasons as well.
• Stealing data or material on a systematic basis to benefit competitors.
• Taking undue advantage of the rank or positon, giving undue favour to “somebody special”.

Big organizations are often prone to vendor frauds. In such type of cases, a collusion with own employee is the major cause most of the time. Fraud by vendors can go on for years and may take many forms, including -
• Cases where goods are not supplied by the vendor despite taking payment in advance.
• A vendor intentionally supplying inferior-quality raw materials or products to the company and gaining financially and such frauds can happen either in collusions with internal persons but sometimes on own.
• Cases where a vendor deliberately overbills the company for excess quantities or prices than what was agree upon.
• Two vendors collaborating together to fix prices at higher than normal and then forcing the company to pay the inflated prices.
• A vendor bribing an employee to gain information on budgets and then using the same knowledge to overbill or overcharge.
• A collusion between a vendor and employee where the latter receives personal remittances from the former for ensuring extra sales or benefits .
• A vendor and employee doing a secret pack where the latter assists in getting the procurement contract in favour of the highest bidder and then receiving monetary rewards for the same.

Accounting frauds have existed for as long the business world exists. They often have a huge significance for all the concerned parties be it the company or its stake holders. And they can reach a big scale if not stopped in the bud itself with the help of a certified fraud examiner.
Some of the common types of account frauds include -
• Releasing payments or funds early to vendors or supplier in lieu of commissions.
• Misappropriating funds by depositing money in false bank account or doing bogus payment for fake invoices.
• Showing fictitious expenses and billing the company for the same.
• Taking credits in own accounts opened fraudulently.
• Submitting false timesheets or paying someone or themselves more than actually earned.
• Creating ghost vendors, receiving fake invoices and approving them for monetary gains.
• Fraudulently paying regular payroll to a ghost employee where no such employee exists.

The HR department within an organization often plays a key role in the smooth functioning by ensuring a proper flow of communication between employees and management. However, this important department is also prone to committing frauds purely due to the position and responsibilities it involves.

Some of the common HR frauds can be -
• Collusion with manpower consultants and receiving money or commission for hiring candidates.
• Demand of money from candidates for placement, or involvement in a secret pack with other hiring consultants and squeezing money out of potential job seekers.
• Manipulating the payroll system to get unauthorized pay, or presenting false expenses or doing timecard alterations.
• Misappropriation of funds in purchase of office inventory or stock without no apparent need.
• Collusion with employees in falsification of payroll information to get more money than entitled.
• Forging receipts for a fake purchase or inflating the expense claim to get the money in own pocket.
• Either adding a fake employee to the payroll or not removing the name of an old employee to divert their salaries to own or someone else’s account.
• Over-purchasing items for the HR department and often selling the extra for money or for own use purposes.
• Involvement in theft of sensitive information of other employees with the view to sell them to others or use in some scam or scheme.

Not all customers are reliable. Some of them can deliberately indulge in fraudulent activities to harm the company they are associated with.The problem happens when customers collude with internal people and engage in acts of fraud that often go on undetected for days. However, such frauds are not hard to crack with a right type of professional help.

Some of the common frauds committed by customers may include –
• Taking supply of the stock and never making payment for it.
• Selling fake products in place of original stock and incurring losses to the organization.
• Involvement in selling products of competitors.
• Selling products without proper authorization and causing losses to the original company.
• Colliding with other dealers or competitors to fix prices to a level that can harm the interests of the client.
• Deliberate misrepresentation of the terms of a deal or lying about the quality or quantity of products for dubious financial gains.
• Getting kickbacks in lieu of showing favouritism towards certain suppliers.

Fraud cases happening at supply chain levels are quite rampant and they trouble even the best-oiled organizations. And if an organization is not prepared, such frauds can go on happening on a systematic scale and cause huge losses to various aspects.

Some of common supply chain fraud include –
• Deliberate diversion of products or stock from their assigned destination to unauthorized resellers.
• Diversion of partial amount of products/stocks to black markets.
• Manipulation of transport-related invoices to inflate costs.
• Substituting the company’s original products with lower quality or sub-standard products.
• Collusion with inside or outside people to steal products in-transit and showing them as case of genuine theft.

Various types of fraud with sales are not only common but also quite rampant across industries. Most of these frauds happen purely to inflate sales figure and make the company appear healthier than it actually is. Sometimes meeting the lofty pressures and expectations of the management and investors can also contribute to sales fraud.

Some of common types of sales fraud include -
• Creating fake invoices or fake shipping document to show more sales than actually happened.
• Making false statements to sell products or deliberating showing better features or specifications than actual with the view sell products.
• Collusion with other parties for selling products and then buying back at a later date with the purpose of showing sales where no actual sale happened.
• Charging hidden fees with the products when the company has not set any such fee or costs with any aspect of the product.
• Using some overt or covert type of pressure tactics to force customers into purchasing additional products or services.

A company’s manufacturing processes or operations are prone to fraudulent activities, mostly by the people who are in charge of the activity and sometimes by outside people as well. Since such frauds can have a direct impact on the quality of products, they need to be identified and stopped at the earliest else they might cause irreparable damage to the organizations’ reputation and finances as well.

Some of common manufacturing frauds include -
• Production fraud where more quantity of products is manufactured in a deliberate manner for dubious gains.
• Deliberately manufacturing products that don’t meet the customer specifications.
• Committing quality fraud by deliberately manufacturing products that neither meet quality standards nor satisfy the client’s expected requirements.
• The use of inferior quality raw materials than agreed in the contracts.
• Inflating the cost of raw materials or inflating the labour costs intentionally to increase the overall manufacturing expenses, resulting in less profit for the organization.
• Selling to competitors trade secrets or passing on information of manufacturing processes.
• Defrauding the organization with false labelling of products.

The cases of IT frauds are growing across industries and no organization is immune to them. Since technology keeps advancing at a rapid rate, its misuse in various forms of fraudulent activities is also growing.

Some of the common forms of IT fraud within an organization can take these forms -
• Using the IT network with a purpose to cheat, steal or harm the interest of the organization.
• Involvement in using the technology in any form to deceive the company for financial gains or other dubious benefits.
• Copying or using the company’s asset or sensitive information in an authorised manner and then involvement in its sale.
• Using the tech means for passing on trade secrets, software or any other key details of the organization.
• Gaining an unauthorized access to the company’s networks or systems for espionage purposes or for any suspicious gain.
• Unauthorised access to customer or business data, or stealing login details of employees, or data breach of any type.
• Using tech means to cheat the organization into giving money or sharing confidential information.

Cases of fraud in security happen across industries and often cause losses of financial and reputational nature. Such frauds mostly happen with collusion of internal employees or those in charge of the security.

Some of common fraud in security include –
• Stealing the company’s property such as physical asset or information either alone or in collusion with some internal personnel.
• Gaining access to sensitive information or confidential documents and then passing on the same to others for monetary gains.
• Misusing the power for various unauthorized gains.
• Involvement in theft or embezzlement of the company’s resources.
• Accepting bribery or commission for showing favouritism to some party.

Sometimes in an organization the acts of fraud are also committed by business directors or partners as well. Since these people are sitting in the top positon, they wield power and have access to sensitive information, resulting in misconduct. Such frauds are systematic, well-planned and often of high volume, therefore causing devastating damages to the organization. As the best fraud investigation company in India, Sleuths India has not only witnessed such cases but has also solved with great professionalism.

Some of the common frauds committed by business directors include -
• Misusing company’s funds for living a luxurious life or for other personal gains.
• Being involvement in systematic type of embezzlement at different levels of operational resources.
• Accepting bribes in exchange for favouritism to various third parties or gaining financially in influencing decisions towards particular parties.
• Falsifying or manipulating the financial statements of the organization to show fake performance across parameters.
• Using the power of position to award contracts in lieu of monetary gains or personal gains.