As the Government continues to put preventative fraud measures in place, it is essential that companies and Limited Liability Partnerships (LLPs) understand any changes that impact them.
In September, a new regulation was introduced as part of the Economic Crime and Corporate Transparency Act 2023 that puts pressure on large companies to proactively ensure their fraud procedures are up to standard.
What was introduced?
The new failure to prevent fraud corporate offence will see companies and LLPs classed as committing fraud if any person associated with the company, such as an employee, agent, subsidiary or contractor, becomes involved in fraudulent activity that benefits the company.
The introduction of the law also covers what is deemed fraudulent behaviour, including:
- Fraud by false representation
- Fraud by failing to disclose information
- Abuse of position
- False or inaccurate accounting
- Fake trading and cheating public revenue
- Participating in any form of fraud
These offences carry major fines, as the amount handed to companies is unlimited and, while companies may not be found guilty of the primary offence, the reputational damage can be significant.
What can companies do to manage any fraud concerns?
The best approach to managing any fraud challenges is to ensure your accounting and auditing processes are robust enough to spot any concerns and give you the ability to address them.
Organising your accounts allows you to understand your financial position and check all incoming revenue and outgoing expenditure.
It also allows you to spot any suspicious activity and immediately investigate to find out the source of the problem.
Regularly conducting financial audits, like organising your accounts, gives you the ability to build a better picture of your company’s finances.
Auditing allows you to spot signs of fraud and improve your internal controls. Both accounting and auditing help you meet your compliance obligations.
Having effective procedures helps you manage fraud challenges confidently and protect your business.
For support ensuring your accounts and auditing prevent fraud, contact us today.
