Jan 31, 2024
Red Flags Indicating Fraud
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
Most fraud in businesses comes from employees and the management team.
Here’s a list of employee red flags to watch for:
Lifestyle changes show expensive new possessions such as new cars and homes.
Substantial personal debt
Addictions such as gambling or alcohol cause behavior change.
Employees who don’t take vacation or sick leave.
Employees in high turnover areas.
Here’s a list of management team red flags to watch for:
Failure to submit information to auditors.
Business units with weak internal controls.
Frequent changes in bank accounts.
Frequent changes in auditors.
Inexperienced accounting team.
Excessive use of loans.
Excessive compensation plans.
Look for these red flags in your business for potential sources of fraud.
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Espresso where we help startups and investors connect for
funding.
Let’s go startup something today.
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