As the Christmas festivities gather pace, so do the chances of corporate fraud, according to one of the region's leading experts in fraud prevention and detection.
Jonathan Middup, head of Ernst & Young's regional fraud investigations team, is warning West Midlands' small businesses of the extra risks that they face in the festive season.
"For some, Christmas is a time for defrauding, as financial pressures brought about by seasonal spending add to those already created by record levels of personal debt," Mr Middup said.
"Add to this dwindling pension prospects - likely to add the money worries of senior employees - and the season of goodwill could turn sour for many businesses."
Such factors provide an incentive for unscrupulous employees to to supplement their income with cash diverted from their employers, Mr Middup said.
He recommended organisations are especially vigilant and pay attention to a number of warning signs which should act as alerts. "Directors should watch for apparent errors which employees explain away but which may actually be part of a fraud pattern," Mr Middup said.
"They should also look very carefully if there is a deteriorating cash position despite profitable trading, or if individual employees seem to be particularly secretive about emails or telephone conversations.
"Often, fraudsters can be long serving, trusted employees, who work very long hours and are reluctant to take their annual leave."
Companies which exert pressure on senior staff to push up end of year results may also be exposing themselves to a greater risk of fraud. Mr Middup added.
"Generally we see a rise in fraudulent activity as some seek to inflate profits, sometimes for financial gain but often just to avoid criticism," he said.
"Where there is a substantial profit related bonus in directors' and managers' pay packets, the approach to the year end can heighten the temptation to manipulate the figures."
Most well managed businesses recognise the importance of controls, but Mr Middup argues that this is not enough. "Directors should assess the risks in the light of all the circumstances.
"The culture of the organisation is vital; they should have clear policies about what constitutes unacceptable behaviour and about the action they will take against fraudsters." ..SUPL:
