Internal fraud is one of the most damaging risks for any organisation. It can affect cash flow, financial statements, reputation and staff morale. The problem is that fraud rarely starts with a large, obvious event. It usually begins with small patterns that are easy to ignore.Â
Being aware of these signals can help management take action early.Â
- Unusual lifestyle changes
A sudden, unexplained change in lifestyle – expensive cars, luxury holidays, visible spending – that does not match a person’s salary or seniority should prompt further questions. - Employees who never take holidays
Staff who avoid taking time off or refuse to share tasks can be protecting unauthorised activity. Forced holidays and job rotation are simple but powerful controls. - New suppliers with unclear approval
Vendors appearing in the finance system without a clear approval process, proper contracts or due diligence can hide fictitious or related-party suppliers. - Last-minute changes to payment details
Frequent or urgent requests to change bank accounts or beneficiary names, especially just before payment runs, are a common fraud technique. - Weak segregation of duties
If the same person can create, approve and pay invoices or credit notes, opportunities for fraud increase significantly. Segregation of duties is a core internal control. - Poor documentation around write-offs and discounts
Large or repeated write-offs, credit notes or discounts with minimal explanation or supporting documentation are a red flag that deserves review. - Defensive behaviour when asked routine questions
Strong emotional reactions, avoidance or hostility when routine financial or process questions are raised can indicate something is being hidden.
No single sign proves fraud on its own. However, a combination of these indicators should trigger management review, stronger controls or an independent forensic accounting investigation.Â