Forensic Focus

A FORENSIC accountant who has trapped countless fraudsters is warning businesses that they could be the next target as the recession begins to bite.

Michael Grayson, director of forensics at business advisory and accountancy firm Clive Owen & Co LLP, has saved companies hundreds of thousands of pounds through his detailed investigations unveiling the webs of deceit left by fraudsters.

His efforts have led to him catching out a company director, who wildly embellished his expenses while working for a multi-million pound company, and saving one client £300,000 when he proved a sub-contractor was over charging for the work he was carrying out.

His clients have included a national bank, major airline, local authorities, hospitals and FTSE 100 companies.

Now Michael, who leads a team of six forensic accountants at Clive Owen's Durham offices, says that with the current economic climate, businesses are more at risk than ever of being targeted for fraud.

"Companies are at their most vulnerable from fraudsters in times of economic downturn because all their employees are under pressure," he says.

"For every fraud, there needs to be an opportunity for it to take place combined with external pressure and a desire from the individual, such as wanting a better lifestyle, or not being able to afford to pay the mortgage.

"The most vulnerable companies are those which have started out small and grown quickly because they don't have the right systems in place to protect themselves. But there are ways to keep the fraudsters at bay."

Michael and his team go into companies and give detailed assessments of where they're most vulnerable so that businesses can act before they become victims.

"The most common response we get when a fraudster has been caught is 'I can't believe I was so stupid'," he says. "But these people may have been with them from the very beginning, a trusted employee who has helped build the business up, and business owners don't have the benefit of knowing what to look for. We say to them if you were going to be a victim of fraud, this is where it would happen.

"It could be Betty in payroll; it could be any one of your staff. Most companies are exposed and it's not their fault, sometimes they're just unlucky. The best frauds are conducted on a spider's web of deceit. But there are steps you can take to combat fraud - and in these times of growing financial turmoil, companies need to be aware that they could be the next target and get help before it's too late."

Foiling the fraudsters

Clive Owen's director of forensic accounting, Michael Grayson, gives his top ten tips businesses should look at in a bid to spot fraudsters in their companies.

1) Examine the areas you are most likely to haemorrhage cash.

2) Is anyone living beyond their means?

3) Does anyone have a gambling problem?

4) Is there someone who never takes holidays?

5) Does anyone get in early or work late without delivering any more work?

6) Does anyone have complicated systems that only they understand? Make sure there are always two people who understand the role.

7) Know where your money goes and know your business. Some financial directors and even chief executives don't know what their people do exactly and are too scared to show it to their staff.

8) Carry out spot checks to spot any errors in accounting. Trace your ledger book to the source once in a while.

9) Check your payrolls each month. Have any new names been added?

10) Bring in a forensic accountant to give your business a health check.

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