Bookkeeping fraud: While no online business owner or influencer ever hopes to commit this crime, the sad reality is that it’s fairly easy to commit if you aren’t careful.
In recent years, the rise of e-commerce businesses and the level of spending power have led to an ocean of opportunities for many entrepreneurs and professionals to strike out on their own. However, alongside it has come the rise of bookkeeping fraud rates because of increased complexities that have been enforced by the Australian Taxation Office (ATO).
The complexity of bookkeeping in today’s digital landscape
As if bookkeeping on its own wasn’t difficult enough, the increased complexity of business tax and financial systems associated with e-commerce firms has spiked up as regulations seek to combat fraud.
Unfortunately, the ATO may have failed to consider the fact that most online businesses are run by inexperienced small business owners and entrepreneurs, groups that frequently make mistakes. Combined with all the stress involved in running a business, the propensity of newcomers and influencers to make financial mistakes with their records can lead to disastrous results.
What type of bookkeeping fraud are you at risk of committing?
If you’ve been running your business recently and have realised that the numbers of your finances haven’t been adding up, then you might be facing the risk of experiencing bookkeeping fraud. In the case of The Ecommerce Accountant, we see at least a dozen new clients each year who come to us with concerns over gaps in their records.
For the most part, small online businesses are most prone to a handful of different forms of fraudulent behaviour because they often lack the necessary resources to detect and prevent crimes. Fortunately, you can keep your businesses clean in the eyes of the ATO and ensure that nothing is being siphoned away by keeping an eye on the most common type of fraud.
Let’s go over each common type of bookkeeping fraud in further detail so that you can prevent or spot and remedy such problems happening in your businesses:
1. Accounts payable fraud
The most accurate way to describe accounts payable fraud is that it involves duplicate or false invoices paid to the account of the perpetrator without the owner or management knowing.
Compared to its counterparts, this crime is the easiest fraud to commit since it goes through a legitimate system by using a company’s accounts payable function. Suppose your records begin to reflect unusual vendors, increased payments to vendors, and payments that consistently fall under the cap for requiring authorisation. In that case, it’s best to act fast because copious damages can take place!
2. Embezzlement
Alternatively referred to as larceny (or grand larceny, in more severe cases), this type of fraud is committed by professionals who are responsible for controlling the funds of the business.
Through this form of bookkeeping fraud, a culprit misrepresents a company’s assets in a way that is not geared towards the benefit of the business but instead for personal use. Suppose someone with access to the company account withdraws money to pay for expenses or diverts money to a personal account under false pretence. In that case, it is safe to assume that larceny is taking place!
Conclusion
Among the different kinds of financial risks that your business faces today, none are as pressing or impactful as bookkeeping fraud, especially in the case of online businesses and influencers. With the help of this guide, you can keep a keen eye on what your company is at risk of experiencing and what you can do to prevent such issues from popping up!
We’re an e-commerce accounting firm that assists big companies, online start-up businesses, and influencers all over Australia. Get in touch with us today to learn more about how we can help you stay up to date and on-track with your finances!