White collar fraud rising for Midlands businesses

BUSINESSES in the West Midlands are having to tackle escalating levels of white collar fraud as employees look to beat the tough economic climate.

In some cases the fraudulent activity may have been going on undetected for years, forensic accountancy advisors have warned.

Helen Gregory, associate director in the forensic accounting team in RSM Tenon’s Birmingham office, said the frauds ranged from simple abuse of expenses procedures through to company directors taking money out of a business they knew to be in trouble.
 
“The difficult economic conditions have taken their toll on so many regional businesses and we all know that many have been under cash flow pressures in particular,” she said.
 
“But as companies have come under pressure, they have been forced to scrutinise their finances ever more closely. It is at this point that some of these irregularities are starting to surface.”
 
Ms Gregory, who has more than 13 years’ experience in forensic accounting, analysing commercial disputes, probing claims of professional negligence and investigating fraud, has acted in a number of high-profile criminal and civil cases, and has twice been seconded to the Serious Fraud Office.
 
“It isn’t just the economic climate that lies behind these cases. In some cases, fraudulent activity which is only now coming to light may have been quietly continuing for years, going unnoticed in businesses which enjoyed significant financial success during the boom years,” she said.
 
“Things change for companies during the downturn. They may have shed staff and those left have started to take a much closer look at all aspects of financial performance. This is when the irregularities start to surface, even though they may have been going on for some time.”
 
In some cases, the irregularities concern directors. She said if it was apparent that a company was struggling to pay its bills then suppliers were entitled to ask questions, especially if the directors appeared to have expensive lifestyles.

“The problem is that smaller companies tend to just take these debts on the chin because they do not have the resources to fight a case,” she said.