As the Government continues to put preventative fraud measures in place, it is essential that companies and Limited Liability Partnerships (LLPs) understand any changes that impact them.
In September, a new regulation was introduced as part of the Economic Crime and Corporate Transparency Act 2023 that puts pressure on large companies to proactively ensure their fraud prevention procedures are up to standard.
What was introduced?
The new failure to prevent fraud corporate offence will see companies and LLPs classed as committing fraud if any person associated with the company, such as an employee, agent, subsidiary or contractor, becomes involved in fraudulent activity that benefits the company.
The introduction of the law also covers what is deemed fraudulent behaviour, including:
- Fraud by false representation
- Fraud by failing to disclose information
- Abuse of position
- False or inaccurate accounting
- Fake trading and cheating public revenue
- Participating in any form of fraud
These offences carry major fines, as the amount handed to companies is unlimited and, while companies may not be found guilty of the primary offence, the reputational damage can be significant.
What can companies do to manage any fraud concerns?
The best approach is to ensure your accounting and auditing processes are robust enough to spot any concerns and that they enable you to address any issues efficiently.
- Robust record-keeping and tight control over your numbers means you have a clear view of your financial position, and that you are able to effectively monitor all income and expenditure.
- Early detection of suspicious activity allows prompt investigation and resolution.
- Regular audits strengthen internal controls, can help to identify signs of fraud, and provide reassurance that compliance obligations are being met.
By implementing reliable procedures, companies can manage fraud risk proactively, safeguarding both their finances and reputation.
For expert support in ensuring your accounting and auditing processes protect against fraud, contact us today.
