Fraud

[Cimaguy]

Recently I discovered some expenses fraud committed by an MD within a company I audited. The company is owned by my business. The MD bought a pair of Bose headphones and disclosed the expenses as client entertainment and costs associated with a meal. He uses the headphones for personal use.

I raised the matter with my finance director. Despite him saying he would deal with the issue he has let it slip and I do not think the issue has been addressed. Its frustrating as it shows weak management.

I would like to escalate this to the CFO which would means bypassing my line manager, the finance director.

As you can imagine I'm anxious. What would you recommend?

[Scrump]

You reported to the Finance Director and you were told they were going to deal with it.
I would leave it at that.

You do not know for sure how it has been dealt with. If you take it any further you are not only highlighting the issue with the MD but you are also saying you do not trust your Finance Director.

[Cimaguy]

I think the FD is weak. He knows the MD and CEO are best chums and doesn't want to manage the situation.

I think you're right to say to leave it. I cant help but think I'm not doing the right thing.

[Wacky Racer]

It's a pair of headphones. Forget about it.

If he was fiddling £000's it's another matter.

[Glasgowrob]

Your going about this the wrong way

Ask the FD to sign off on some new toys for you 😁😁

[Silenoz]

I'd be more worried that the company has an auditor reporting to the FD!

But, you've reported it. You've done your job. Anything that happens beyond that is none of your concern.

[PurpleTurtle]

When you say “the company is owned by my business” it makes you sound like you are a director of the latter. That’s not the case is it?

[Countdown]

Silenoz said:

I'd be more worried that the company has an auditor reporting to the FD!

Internal Audit usually report to FD.

OP - you have various options depending on the size and governance arrangements of your organisation. The easiest way would be to tip off the Chair of th Audit Committee or the Chair of the Board. If neither of them are interested then there is no point you doing anything more.

ETA:I’m not sure why YOU are anxious? uzzled:

[GT03ROB]

Cimaguy said:

Recently I discovered some expenses fraud committed by an MD within a company I audited. The company is owned by my business. The MD bought a pair of Bose headphones and disclosed the expenses as client entertainment and costs associated with a meal. He uses the headphones for personal use.

I raised the matter with my finance director. Despite him saying he would deal with the issue he has let it slip and I do not think the issue has been addressed. Its frustrating as it shows weak management.

I would like to escalate this to the CFO which would means bypassing my line manager, the finance director.

As you can imagine I'm anxious. What would you recommend?

Really what is there to worry about. You've done your job. They are not bothered.

If this is the biggest example of a director in your company claiming something he shouldn't you company is in pretty good shape.

If this makes you anxious, my recommendation would be learn to chill a little more.

[hotchy]

If your business owns that business, then surely you are the boss? If so who does it matter who you tell, your the boss? Sack/dismember/sausages in his lawn etc.

[rog007]

Your concern and anxiety is understandable.

Couple of things:

- are you sure beyond all reasonable doubt that said headphones seen worn are the same as purchased?
- might the headphones have been bought for legitimate purposes?
- did you lodge your initial concern verbally or via email?
- is this the first time you’ve had any suspicions about fraud at all and with this Director?
- does your organisation have a supportive whistleblowing policy

[KAgantua]

The grass always gets cut

[bad company]

Wacky Racer said:

It's a pair of headphones. Forget about it.

If he was fiddling £000's it's another matter.

If he’s committed fraud buying the headphones he may well be doing other stuff. I’d be investigating.

[basherX]

Countdown said:

Silenoz said:

I'd be more worried that the company has an auditor reporting to the FD!

Internal Audit usually report to FD.

OP - you have various options depending on the size and governance arrangements of your organisation. The easiest way would be to tip off the Chair of th Audit Committee or the Chair of the Board. If neither of them are interested then there is no point you doing anything more.

ETA:I’m not sure why YOU are anxious? uzzled:

In a company big enough to have an Audit Committee (and IA) the very last place they should be reporting to is the FD.

OP- people who fiddle expenses are idiots, the risk is almost always wholly disproportionate to any benefit. People who fiddle their expenses and can’t even make a decent fist of hiding their trail are indescribably stupid (or arrogant).

You’ve reported it and, as others have said, you may not be in possession of all of the facts so tread carefully. What you do next rather depends on the size of the organisation.

[Silenoz]

[quote=Countdown]

Internal Audit usually report to FD./quote]


Not in my experience they don't, and as said above, absolutely shouldn't.

[227bhp]

Weird how someone at this level has to ask on a motoring forum how to run their own business.
Personally i'd let him know you know, subtly or otherwise. Wag the finger, leave it at that and monitor him.

[Countdown]

Silenoz said:

Countdown said:

Internal Audit usually report to FD.

Not in my experience they don't, and as said above, absolutely shouldn't.

Your experience is different to both mine and the OPs. In my current role they report to the Deputy FD (me). In my 4 previous roles the Chief Internal Auditors all reported to the FD

Reporting to the FD doesn’t mean that any concerns they raise stop there. They can always go to the CEO, Chair of Audit or Chair of the Board but, for line management purposes and for doing the Annual IA Plan it makes sense for IA to report to the FD.

For the avoidance of doubt there’s no reason why they can’t report to another Board-level Director but given that most of their assurance reports will be finance-related it makes sense for them to report to somebody in Finance.

[Countdown]

227bhp said:

Weird how someone at this level has to ask on a motoring forum how to run their own business.

I think the OP works in Internal Audit within a subsidiary of a Group Company. I don't think it's his Company

227bhp said:

Personally i'd let him know you know, subtly or otherwise. Wag the finger, leave it at that and monitor him.

I would suggest that's the worst thing to do. If the Offender later gets exposed for more widespread wrongdoing and it transpires that the OP was already aware that he was dodgy but hadn’t reported it through the correct channels it’s likely that OP would be issued with his P45

[ralphrj]

227bhp said:

Weird how someone at this level has to ask on a motoring forum how to run their own business.

I don't believe that the OP owns the business although the phrase "The company is owned by my business" clearly causes confusion.

I suspect that:

The OP is an employee of Company A.

Company A owns Company B.

The OP has performed an internal audit of Company B and has discovered that the MD of Company B appears to have made a personal purchase but disguised it as business expenses.

The OP has told the Finance Director of Company A what they discovered.


To answer the OP's question - I recommend doing nothing. You have told your Line Manager. If they decide to do nothing then perhaps they should feel anxious. However, as long as your concerns were documented in an email then you have nothing to be anxious about.

[Wilmslowboy]

I imagine if the organisation is big enough to have an internal audit team, it will have a documented whistle blowers policy.

If written correctly it will suggest what to do in this situation (first reported to manager and then no action taken).

I think it is fair for you to ask your line manager if action was taken , needless to say he/she won’t need to share with you what action, but should provide assurance it was ‘appropriately’ dealt with according to company policy.