PERTH forensic accountants have warned of an increase in cases of corporate fraud as the expected aftermath of the global financial meltdown begins to affect Western Australia.
PERTH forensic accountants have warned of an increase in cases of corporate fraud as the expected aftermath of the global financial meltdown begins to affect Western Australia.
Local firms say that scrutiny of accounts of troubled companies facing insolvency has revealed a worrying trend in the number of cases of financial cheats, with companies and directors using criminal means to access cash to keep their business or personal finances afloat.
They advise that businesses should be alert to financial irregularities and ensure that processes and internal controls are in place to help minimise the risk of spurious transactions.
PPB partners Jeff Herbert and Simon Theobald said while Australia begins to feel the crunch from the savage market downturn, combing through company books often reveals the prevalence of fraud as business owners resort to increasingly desperate and illegal methods to survive.
"The main reason for a marked increase in fraud in the next 12 months will be due to a lack of available credit; people have previously lived hand to mouth in the good times and now they can no longer sustain that lifestyle, bonuses are starting to dry up and people depended on these bonuses to fund their lifestyles and manage the debt burden," Mr Herbert said.
PKF partner corporate recovery Ken Whittingham said the chartered accounting and business advisory firm was receiving an increasing number of calls from bankers, accountants and lawyers whose clients were facing business failure in the worsening economic environment.
"It is disturbing to see a criminal element creeping in, but business owners and directors should remember the maxim that crime doesn't pay," Mr Whittingham said.
He said cases of fraud commonly include invoice fraud, directors cashing unauthorised cheques and companies building up large loan accounts in the knowledge they could not be repaid.
Mr Whittingham said unlisted companies were at more risk of fraud than their listed counterparts because compliance rules and regulations were not as strict as those for listed companies.
BDO Kendalls associate director of forensic services and former lawyer, Raquel Parish, said the current economic conditions were the "perfect recipe" for cultivating fraud.
She told WA Business News that businesses with liquid assets such as those in the food and beverage industries, manufacturing companies and those in the private sector were most vulnerable to double-dealing and fraud.
