With the prolonged disruption of COVID-19 likely to lead to a recession lasting a minimum of 12-18 months, new threats emerge and, in our experience, the occurrence of fraud is likely to increase.
When economic survival is threatened, the line separating acceptable and unacceptable behaviour can, for some, become blurred. In addition, fraud and other economic crime are increasingly becoming a focus of criminal activity and the government announced that fraudsters are exploiting the spread of coronavirus in order to carry out fraud and cybercrime. While some authorities are prepared to give leeway on certain risk mitigation activities, you need to ensure you remain alert to current and future risks.
Over the years, we have unearthed many different types of fraud, ranging from teaming and lading, back handers, profit manipulation and issues surrounding cash sales. The automotive sector has one of the highest percentage of frauds committed by insiders so ensuring you have strong financial controls in place is essential.
In April 2020, it was announced that Lookers was expanding its internal fraud investigations to its entire business after initial findings from one of its operating divisions resulted in an expected one-off charge of over £4 million in its 2019 financial results. By the end of June, the investigation had revealed a £19m issue in the accounts. This just illustrates how allegations of fraud, previously undetected, emerge from the shadows and the results can be devastating.
We have considerable experience dealing with common fraud risks and can work with you to help you protect the business. We have produced a guide about the key types of automotive retail fraud and look in turn at the common frauds, provide real case examples and consider strategies to manage risks.
If you would like to discuss fraud in more detail or find out about how we can help you develop strong financial controls, please contact us to discuss your specific circumstances.
