fraudTheft by payment of inflated or false payables invoices

This fraud relies on the club receiving inflated invoices for goods and services or false invoices for non-existent goods or services. For inflated invoices, the fraudster replaces the real invoice with an inflated one. They then pay the real supplier the original invoice amount and keep the excess. For completely false invoices, the fraudster would then rely on a lack of checking by others, so that funds are paid to them. In an ongoing fraud, the regular appearance of an invoice from the fake supplier would become normal and there is less likelihood of its legitimacy being checked.

A club can combat this by:

  • When an invoice is first received, check that the following are legitimate – ABN, telephone, address, email. If some of these details are missing, that should raise suspicions.
  • Having two people sign all cheques or authorise all online payments. Both authorisers should sight the original invoices or receipts.

Theft of stock

This fraud relies on a lack of checking during the lifecycle of the stock:

  • Has the stock been checked against the delivery docket/purchase invoice?
  • Has there been a stock take at the start and finish of every event?
  • Have sales and purchase records been reconciled to the stock takes?  

While frauds within a club are often the work of an individual, stock related frauds are more likely than other fraud types to involve collusion with another person. With a stock related fraud the delivery person can assist with altering legitimate paperwork to assist the fraudster.

Motivation for frauds

Frauds most often arise because of other stress in a person’s life. The fraudster may well be a nice person, a hard worker and have no criminal history. However circumstances in their life and the opportunity afforded by their position in the organisation can lead to fraud. The stress may be their own or a family member’s habit (drinking, drug taking, gambling). They may need money to pay for medical bills. The person may simply see an opportunity to “get ahead” that they “deserve”.

Signs to look for

A fraudster could be displaying one or more of the following:

  • Volunteers year after year as a Treasurer or event organiser where they handle money and/or goods.
  • Never or infrequently misses an event. Is reluctant for someone else to perform their role during an absence.
  • Appears to be a diligent member who is widely liked and trusted.
  • Is reluctant to delegate some of their tasks to others
  • Has a change in their personal circumstances that is stressful but refuses to take a break from club duties.

Now that you know what to look for and how fraud happens, we hope you will be ready to prevent it happening in your organisation.