Fraud schemes and investigations amid the COVID-19 pandemic

Companies are handling important operational, financial, and strategic issues from the COVID 19 crisis. Embezzlement schemes or even financial statements are manipulated to look at immediate financial needs. When pressures begin to rise, the line that separates acceptable from unacceptable conduct can become vague. Separation of duties might lead to workforce displacement or distraction.

Increased internal fraud risks have resulted in ways for fraudsters to gain when disruptions in normal business operations take place in weakened control environments. Market crashes and disasters have been manipulated by scammers to benefit each other. Organizations should enforce the following directives: knowledge about internal and external fraud risks and schemes throughout pandemic and post-pandemic recovery; intense activity and vigilance; and preparedness to efficiently and effectively respond to potential cases.

Risk factors for occupational fraud

Occupational fraud generally asks for three risk factors: pressure, opportunity, and rationalization and it is called the Fraud Triangle. For instance, management would increase revenue numbers for some time due to external shareholders’ pressure for increased value.

Layoffs and remote work conditions could lead to a decline in internal controls. There is an increase in pressure, opportunity, and the ability to more easily rationalize ways means that CFEs should increase fraud schemes.

Are they corrupt?

When there is a conflict of interest and clash among employees and outside third parties (e.g. vendors, customers, suppliers, distributors to put in place fraudulent billing investigation, purchasing, and sales schemes to benefit.

Bribes and kickbacks were given to external third parties who may be government officials on behalf of a company to receive contracts that could raise employees’ rewards.

Employees putting in fictitious invoices related to vendors associated with a COVID 19 response that shows organizations to directly pay them or related teams.

Add fictitious employees to payroll registers.

Launch fictitious vendors to the vendor master file to wire funds and other firms’ assets.

Tamper with checks by altering payees and forging schemes.

Submitting fraudulent travel and expense reimbursement expenses for non-business/non-permitted costs.