MEDIA RELEASE 12 August 2004
Workplace fraud an overlooked issue for many SME's
Many small to medium businesses, including family businesses, are at risk of
considerable losses from fraud committed by people at their workplace on their
employer, according to forensic accountants Dolman Bateman.
According to Warwick Dolman, Director of Dolman Bateman, the small size of a
business is no guarantee that fraud won’t occur, and often this can be the
catalyst for illegal activities.
“Around 50% of companies suffer losses from employee fraud each year, so it is
inevitable that fraud is also affecting at least some of the one million SME’s
in Australia, and it is time they addressed the issue,” says Mr Dolman.
“Owners and managers of SME’s may believe they can trust their staff,
particularly if they know them all personally or they are family members, but
unfortunately this tends to work in favour of potential fraudsters, as they are
never suspected and their activities go undetected for longer.
“Management may also believe that they would notice if fraud was being committed
in their business, but the reality is 40% of frauds run for more than two years
before discovery, and most fraudsters tend to operate at low levels with their
fraud going undetected in the day to day variations in the business.
“In small to medium businesses there is often no separation of duties – for
example, the person who receives the cheques is the same person who enters them
into the books and banks them.
“In a case we were recently involved with, a part-time bookkeeper, working for a
small graphic design company, misappropriated $15,000 worth of funds by writing
out cheques in favour of himself and forging the proprietor’s signature. The
cheques were allocated to print purchases and did not stand out obviously in the
“Often there are no checks in place to ensure people are doing the right thing,
and systems and procedures are not well documented, making it very easy for a
dishonest employee to take advantage and commit fraud, potentially involving
considerable sums which can threaten the future of the employer’s business.
“Business with less than four staff, which are in the process of expanding, are
sometimes most at risk, as they often fail to update their original systems and
don’t realise new systems should be implemented as the business grows. Overhead
pressures also contribute to short-cuts on procedures and controls.
“The most important thing for any business is that systems and controls are in
place to monitor work flow and business processes and provide as few
opportunities as possible for potential fraudsters to exploit.
“These controls can include an authorisation procedure for transactions and
activities, properly designed processes, documents and records, adequate
safeguards over access to and use of assets and records, and supervision and
“Most vital of all is that these procedures are actually followed and are
reviewed on a regular basis, preferably by an objective professional who may
turn up some holes in your process or identify areas of risk you may not have
seen,” says Mr Dolman.
Dolman Bateman specialises in the detection, investigation and minimisation of
fraud in the workplace. Warwick Dolman is a founder and Director of Dolman
Bateman, and is both a Chartered Accountant (CA) and Certified Practicing
Released for Dolman Bateman by Dennis Rutzou Public Relations.
For further information contact Kristen Mackie or David Lizzio on (02) 9413