The prosecution of criminal fraud matters, or white-collar crimes as they are often called, is an extremely important part of the message being sent out against the fraudster. However, it is not enough just to clamp down hard on the business criminals, it is also necessary to see that the justice being given out is fair and balanced. If not there is the danger of the system weakening as a result of its failure to observe reasonable human rights which might result in the increase in fraud overall.
The reason why the Canadian criminal justice system is very respected around the world and often copied in whole or in part is because it has an apparently fair approach in that it suggests that everyone is innocent until proven guilty. However, in practice this is not quite the case. This is because despite the hard pressed finances of the public sector fraud regulators including the police and the Crown Prosecution Service, the funding for those accused is even harder to get.
Employees facing increased financial hardships (such as having a spouse who was laid off, a sick family member or a home at risk of foreclosure) are more likely to take illegal actions to augment their incomes.
The stress of these types of situations has lead to violence in the workplace, embezzlement and identity theft. Employee larceny and other illegal acts which can weaken or even ruin a corporation.
Many frauds are conducted by trusted long-term employees who are in positions of responsibility, such as bookkeepers and accountants. Companies should watch for employees who are living a lifestyle that seems beyond their means, as well as employees who never take a vacation or try to prevent others from seeing the firm’s books or accounting software.
While most hiring managers understand the benefits of screening new hires, it’s less common for companies to continue screening their current employees. This can be a costly mistake. There is no guarantee that an employee who is hired with a clean criminal and credit record will remain that way.
In a February 19 Wall Street Journal article on this trend, writer Simona Covel reported: “Small companies are especially vulnerable because they often lack stringent internal controls to prevent fraud. Sometimes managers of affected companies attribute lost funds to lower sales – never even suspecting foul play.”
The role of a forensic accountant in these cases is important in order that the case can be unpicked and presented clearly and succinctly. Very often the fraudster is as guilty as accused, but in this case the defence team can be sure that they have covered all the bases. In other cases, understanding the real problems can lead to not guilty verdicts or mitigated sentences, which is surely a better result for all?