In our previous newsletters, we discussed the two most common types of fraud in the workplace: payroll fraud and fraud in a company's supply chain. In this newsletter, we will highlight red flags to look out for, which may indicate whether fraud has been committed in the workplace.

Irregular business activities such as funds being transferred to vendors that the company does not do business with or bad record keeping of purchase orders and invoices are red flags that should be investigated further. Lack of proper documentation may suggest intention to cover up fraudulent activity with suppliers who may have a relationship with one of the employees. Normally, these suppliers have a murky business background, with no experience, no factory, and no employees. A business deal with vendors that does not go through proper procurement channels should also raise concern.

A sudden, noticeable change in the lifestyle of an employee is another easily spotted red flag. You may notice the employee in question suddenly displays an unusually luxurious lifestyle not observed before that is seemingly unaffordable especially considering their income.

If the company cannot identify fraud from these red flags, in the next issue we will discuss whistleblowers, who may assist the company in identifying fraud in the workplace.

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