Employee fraud is a risk all agencies face and a recent claim highlights how important it is for all agencies to have the right checks and balances in place to avoid falling victim.

By Nancy Rainbird - Realcover

You might think “it will never happen to me”, but that’s not necessarily true. A recent case that came to Realcover’s attention shows just how easy it is for an agency to fall victim to employee fraud.

An agency Principal advised Realcover that one of their property managers had perpetrated a significant fraud. The property manager had managed to direct approximately $80,000 from the agency’s trust account into their own bank account.

The property manager looked after about 250 properties and, as part of their duties, was responsible for arranging repairs. Payment of any repairs was authorised by the property manager when the invoice was presented and the authorised invoice was then forwarded to the accounts team for payment.

It was discovered that the property manager had been authorising payment of invoices for repairs that were never undertaken. The invoices were all paid to the same tradesperson, who was the property manager’s partner. The payments were made to their joint bank account.

Tips to minimise your risk

There are some simple steps you can take to ensure you don’t fall victim to a similar situation:

1. Record the tradie’s details
   Each time you engage a new tradesperson, be sure to record all their relevant details on a dedicated form. The name of the tradie, their address, ABN, bank account details, telephone number and any other contact details should be recorded on the form. Once the form is completed, it should be signed off by the Principal or office manager.
   
   
2. Check the tradie’s ABN
   It’s also important to check the tradesperson’s ABN by going to abr.business.gov.au. In this case, a simple ABN check would have revealed that the tradie’s surname on the fraudulent invoices was the same as the property manager’s surname – an obvious red flag!
   
   
3. Changing bank account details
   Staff committing fraud will often attempt to substitute their own bank account details for the valid details of a tradesperson. Any changes to a tradie’s bank account details should be recorded on their form (see point 1 above), with a notation that the request was made by the tradesperson themselves. The Principal or office manager should then call the tradie to confirm the request is valid.
   
   
4. Cross check bank account details
   As an additional level of control, the Principal or office manager should also cross check the tradie’s bank account details against the payroll records of all property management staff.
   
   
5. Dual signatories
   You should always require two signatories for all payments made by your agency, and each payment should be supported by a valid tax invoice that the second signatory checks before signing off.
   
   
6. Regular work reviews
   Be sure to periodically check the work of your property managers and ensure trust account reconciliations are reviewed and signed off each month. Also ensure bond reconciliations are completed in a timely manner and undergo a double check.
   
   

DISCLAIMER
While care has been taken in preparing this article, and the information in it has been obtained from sources that Realcover believe to be reliable, Realcover does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose that the article may be used. Realcover accepts no liability for any loss or damage (whether caused by negligence or not) resulting from the use of this article.