To fraud or not to fraud….that is the question

FraudAs an accountant, fraud, and in particular financial fraud, really pisses me off.

You see when you run a company you have obligations – morally and ethically, as well as financially and legally.

“You can’t put your head in the sand and say “Sorry – I had no idea”.  That just doesn’t cut it as a company director.”

So when I read this article from Smart Company today about the founder of Street Swags being charged with fraud it really got my interest – and not in a good way. I know people who have personally donated to Street Swags so that homeless people can be provided with swags – but now it has me wondering “where did that donation really go?”. And that is never a good question to be asking about a registered charity.

“Granted – yes – I don’t know the full story (and probably never will) – but I do know this – people do not get charged with fraud without a full investigation and supporting documentation.”

How do I know this – you see back in my pre-business days I worked at a local hotel in their accounts team. I took over from a previous bookkeeper and I started to question a few things. As it turns out I discovered that payments coded to superannuation and suppliers totaling over $30k had in fact been paid to the former employees “other” bank account. In order for me to find out this level of detail we had to do bank investigations and audit trail investigations into online banking which were only available via the bank’s fraud team. We had to get the local police involved and present all our findings and I had to go to the local cop shop and provide a statement.

“All the time the business owners was blissfully unaware – however the employee was very well aware of what she was doing. This was no mistake, but fraud at its finest.”

This person was charged with fraud and a hearing date set at the local magistrates court. All in all this was a 2-3 month process. Not an overnight decision by any stretch of the imagination and certainly not without proof and documentation to back up the case.

As an accountant (yes – my numbers nerd hat is firmly in place) – for Street Swags to rack up $170k worth of debts on a personal credit card and for the owner of that credit card to have no idea – well sorry but I call bullshit on that one. Also, a personal credit card would not form part of the audited financial statements, so using the “but we get audited so it must be right” excuse – again, simply doesn’t fly with me.

So either this is purely a case of mistaken identity (which I sure hope it is), or this is a case of “creative accounting” and not in the fun creative way, but in a “I am taking your money and hiding it and hope you don’t find it” kind of way.

I will be watching this one with interest and hope for a happy outcome.

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