Assessment of losses due to fraud

Quantifying the loss is essential if any recovery is available from the fraudster or insurance if that is possible, or to provide evidence to the Court for reparation or the determination of the penalty that might be imposed. Consideration must be given to the cost/benefit. There is little point in going to the nth degree if there is no recovery and no change in the possible penalty.

Quantification of losses paid to ghost employees are generally easiest to quantify. If payments to false invoices are electronic, these are also generally fairly easy to quantify. Payments for purchases or services for the benefit of the fraudster are more difficult as one must determine what services were for the company and what were not.

Cash sales transactions can be almost impossible to quantify if there is no evidence of any sale. A cancelled sale on till records evidences possible defalcation but not the amount. Such losses can only be estimated by comparison with other operators.

Comparing the numbers of cancelled sales to other operators indicates the number of possible fraudulent transactions. Then comparing cash taking to credit card transactions can provide an estimate of the amount. The larger the number of till operators the more reliable the basis of comparison.

Consideration must be given to legitimate reasons for possible variations between operators.

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