Rural fraud is flying just under the radar, according to the latest KPMG Fraud Barometer. Plenty of corporate fraud is happening in businesses throughout New Zealand – a record $72 million in the past 6 months. The average cost of these major white collar fraud cases? $2 million plus.
But farmers shouldn’t be too smug. KPMG Agribusiness Partner Ian Proudfoot reckons there are plenty of rip-offs occurring in the rural sector and more than ever, farmers need to be on red alert.
“Sadly, New Zealand isn’t as honest a country as it was 10 or 15 years ago,” he told me on ‘Money Talks this week. “Globally, fraud is becoming a bigger problem. And with more electronic transactions, everyone needs better documentation.”
Ian Proudfoot points out that the old days of the one farm, one farmer/owner-operator model are well and truly gone, replaced by the modern dilemma of farms with higher debt levels, multiple owners and foreign ownership. It all adds up to a need for more vigilance and much more corporate governance.
Without the proper controls, you could face losing millions of dollars, says Ian, as some of his own rural clients have over several years of lax attention to financial detail.
The typical fraudster, says Ian, is a 46-year-old white collar middle manager with a high degree of responsibility who’s been gifted a lot of financial authority by his boss.
The most common theft is theft of cash by fudging legers, then taking money out of the bank and posting entries to cover it. Also popular? The backhander method, where the fraudster does a deal with a supplier and pays out a higher price which is then shared back with the crooked company manager.
Your top tips to prevent being ripped off?
Ian Proudfoot recommends you set very clear budgets, especially if you have more than one farm. Keep tabs on the operation because it’s very difficult to recover the missing funds once the horse has bolted. And above all else, constantly monitor your investment – stay in touch and get out on the farm to truly understand what’s going on.
You work hard for your money.
Hold on to it!
