Stories from practice

19 February 2018

Uncovering a 2 million USD embezzlement by Ufuk DOĞRUER from TURMOB

How can professional accountants help you?

Accountants can help uncover financial crime if a company asks for help to explain unexpected losses via a special purpose audit.


 

Ufuk Dogruer, Auditor from Turkey, told us about his experiences:

 

Fraud costs companies money

A company loses about 5% of its annual revenue as result of financial crimes such as fraud and corruption, according to the 2016 Global Abuse report. A lesser known fact is that 40% of this fraud is committed by employees. Employee fraud not only affects the company owners and investors, but also other employees, stakeholders, credit institutions and the country’s economic stability.

Employee fraud: a needle in a haystack

In 2016 a top 500 global company contracted my services for a special purpose audit. While comparing the financial statements, the company’s management had noticed high losses in areas where, according to the sales figures, they were supposed to make a profit. After initial checks, the company identified signs of fraud, but could not trace the source nor the extent of the financial loss. The purpose of our audit was to examine the financial statements, identify the source and determine the amount of the fraud.

Preventing new fraud

At the end of the audit process, we identified the source and size of the fraud: an employee had embezzled 2 million USD. The staff member responsible for the fraud immediately refunded the full amount. Then we helped the company implement procedures to prevent new cases of fraud.

A major reason why this fraud could happen was the lack of proper internal controls.  Specifically, a checks and balances procedure between the employees and the management. In cooperation with the company’s management, we put in place:

  • new procedures for declarations, profit and loss and accounting records
  • a new internal control system based on a cross-control principle in the accounting records

This means, for example, that bank payments are limited to an amount depending on a person’s level of authority, and that bank withdrawals can only be done when two people sign for it.

This new system has immensely strengthened the company’s immune system to avoid experiencing fraud again.

 

 


Connect with
the author on 

Related content

Stories from practiceShaping the accountancy leaders of tomorrow

19 February 2018

EventAudit quality: definition, drivers and indicators

18 May 2022

PublicationAudit Quality Indicators: a global overview of initiatives

5 May 2022

PublicationESG Governance

12 April 2022

PublicationWar in Ukraine – what European accountants need to know

9 March 2022

NewsWar in Ukraine – responses from the accountancy profession

9 March 2022

NewsStronger corporate reporting in Europe – solutions by the accountancy profession

2 February 2022

PublicationSupply chain sustainability assessment

28 January 2022

PublicationAudit facts: what you need to know on audit, auditors and supervision

22 November 2021

Consultation responseEC’s consultation on AML/CFT legislative package

17 November 2021

PublicationNon-audit services and auditor’s independence

2 November 2021

Consultation responseEC’s consultation on guidance on the use of public-private partnerships in the framework of AML/CFT

28 October 2021

Consultation responseEC’s consultation on fighting the use of shell entities and arrangements for tax purposes

31 August 2021

Consultation responseIAASB’s survey consultation: work plan for 2022‒2023

25 August 2021

BlogHow to proactively manage money laundering risks?

19 July 2021

BlogMoney laundering is a real issue: are we doing enough to fight it?

12 July 2021

Consultation responseUK government BEIS department’s consultation on restoring trust in audit and corporate governance

8 July 2021

EventBuilding an effective anti-money laundering ecosystem

17 June 2021

PublicationBuilding an effective Anti-Money Laundering ecosystem

28 May 2021

PublicationResponses to Fraud and Going concern: recommendations to strengthen the financial reporting ecosystem

17 May 2021

Consultation responseIESBA’s proposed revisions to the definitions of listed entity and public interest entity in the...

5 May 2021

Sign up for our newsletter

* indicates required
Would you like to subscribe to our newsletter?
On which topics would you like to receive news?