Trust account handbook - Department of Commerce - wa.gov.au

PART 4. PREVENTING THEFT AND FRAUD
4.1 Early indicators of theft and fraud
As in any other business, theft and fraud can occur from within a settlement agency. In the majority
of cases, these acts are committed by an employee of an agency and often the person in bona fide
control is not aware of the activities of the perpetrator.
Commercial criminals are likely to identify and target organisations perceived as ‘soft’ targets. A
proactive approach to prevention is essential and there are certain tools and techniques available
to make an agency a ‘hard target’ (eg advise staff on induction that it is agency policy to refer all
criminal issues to the police).
It is in the interests of the agency and, in particular, the person in bona fide control to ensure that
proper control and supervision of all staff takes place.
The person in bona fide control has strong legal responsibilities in relation to the protection of trust
account money. The agent could even be held responsible for reimbursing money misappropriated
by employees.The person in bona fide control can help limit the possibility of theft and fraud of trust
funds, and other money, by putting in place some internal controls and early indicators.
If one or more of the following seems familiar, the agency could have a problem:
• missing original supporting documents for transactions;
• unaccounted for/missing receipts;
• altered documents;
• outstanding or incomplete account reconciliations;
• complaints from clients about delays in receiving money;
• long-term unpresented cheques;
• balances held in client trust accounts for a long period of time;
• deteriorating financial position of the agency; or
• auditor’s access to people or information in the agency is restricted.
Agents cannot rely solely on statutory appointed auditors to identify theft and fraud in their agency.
A misappropriation may occur well before an annual audit is performed. The auditor also relies on
the accounting work within the agency, which may have been falsified by the perpetrator.
It is recommended that agents discuss internal control mechanisms with their auditor. Some
common measures that can be carried out by the person in bona fide control include:
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• making periodic checks on the work of employees;
• involving themselves in bank reconciliations;
• maintaining control over cheque books and receipt books;
• understanding and operating the computer system; and
• following-up on outstanding cheques and client balances.
Encouraging a ‘whistle-blowing’ culture within the agency can also be an effective and relatively
cheap way to encourage honest employees report suspicions of theft or fraud to their superiors.
SETTLEMENT AGENTS’ TRUST ACCOUNT HANDBOOK