The new corporate offence of “failure to prevent fraud” dramatically changes who is left holding the bag when fraud is committed.
It is part of a new network of fraud preventative measures and it is designed to keep companies and Limited Liability Partnerships (LLPs) more invested in combatting fraud.
As part of the Economic Crime and Corporate Transparency Act 2023 that brought about sweeping changes to Companies House, the new regulation designed to tackle fraud has been introduced.
It is vital that all companies and LLPs understand their new obligations and the measures that need to be taken to stay compliant.
What is the new anti-fraud measure?
An organisation can now be held criminally liable if someone connected to it, be they an employee, agent, contractor, or subsidiary, commits fraud intended to benefit the business and the company did not have reasonable procedures in place to stop it.
The fines can be unlimited and the reputational damage severe, which means that this can be a truly devastating law to fall foul of.
The introduction of the law also covers what is deemed fraudulent behaviour, including:
How are companies now tasked with combatting fraud?
The central issue at stake is an obligation to have robust enough accounting and audit practices to ensure that no concerns slip under the radar.
Negligence is no longer an acceptable excuse for letting fraud transpire and everyone involved in the company or LLP needs to be trained to spot the warning signs.
Keeping your accounts well organised and reviewed by expert professionals will be useful for keeping compliant with the new obligations.
Your business will also likely benefit from more organised accounts and more effective audit procedures, so that is a positive side effect of tackling fraud.
While well-organised finances are important for facilitating future business growth, they are also essential for spotting fraud.
Fraud is easiest done in secret and in the shadows, so keeping the light on your numbers means that you are fully aware if anything suspicious transpires.
Auditing is the backbone of these compliance measures, as it should enable you to spot any signs of fraud while also tightening your internal controls.
Our expert team are on hand to help you utilise the partnership of accounting and auditing practices to ensure that your finances are as shielded from fraud as possible.
If you have any concerns about your new obligations in accordance with the new guidelines, or would just like a better approach to accounting and auditing, then our team can help you.
Speak to our team today to get peace of mind with your finances.
