Duplicate invoices, bank account information changed without verification, unusual journal entries: certain discrepancies warrant an audit, though they do not in and of themselves constitute proof of fraud. For finance departments, compliance officers, and legal counsel, the challenge lies in identifying these anomalies, verifying their source, and documenting the findings. An approach that combines internal controls, data analysis, and human review allows for more targeted investigations.
An accounting discrepancy is not necessarily fraud
Fraud implies an intent to deceive. Data entry errors, import issues, or accounting timing discrepancies can also result in inconsistencies. This distinction is outlined in audit standard NEP 240, published by the High Audit Authority.
Investigations may focus on account manipulation, a fictitious transaction, or misappropriation of assets. The right question, therefore, is not simply “Is this entry unusual?” but “Does it correspond to a real, justified, and properly authorized transaction?” It is also important to distinguish between accounting irregularities and attempts to misappropriate payments, which require further verification.
Five Signs to Watch For and the Associated Checks
1. Similar invoices or invoices that are insufficiently substantiated
Two invoices listing the same supplier, an identical amount, and similar reference numbers should be reconciled. This could be a duplicate, a down payment, or perfectly legitimate recurring services. Compare the invoices to purchase orders, proof of delivery or service rendered, and payments already made. A single invoice is not sufficient to confirm that the service was actually provided.
2. A change in bank account information associated with an urgent request
Any change to bank account information immediately before a payment is due should trigger an independent verification. The email may originate from a compromised email account or from a third party impersonating the supplier. Bpifrance Création recommends calling the supplier back using a number you already know, rather than the one provided in the suspicious message. Be sure to keep a record of this verification.
3. Unusual manual journal entries at the end of the period
Significant entries, imprecise wording, or corrections entered outside of standard practices may require review. These elements do not prove anything on their own: financial statements also include routine adjustments. Review the business rationale, the person who entered the transaction, the supporting documents, and the approval process, then compare the results with previous periods.
4. Recurring expenses that bypass approvals
Several reconciled payments to the same payee may conceal a single transaction that should have been reviewed at a different level. The audit must reconcile expenses by supplier, period, and purpose, looking beyond their individual amounts. It must then verify whether this breakdown corresponds to separate services or constitutes a circumvention of internal rules.
5. Persistent discrepancies between the accounts and the supporting documents
An unexplained bank discrepancy, open suspense accounts, or inconsistent vendor balances warrant further analysis. Trace the transaction’s path from the initial document through to its settlement. Recurring anomalies and the lack of a substantiated explanation carry more weight than an unusual amount considered in isolation.
Automate checks while maintaining human analysis
When journal entries come from multiple entities or software programs, you must first verify the quality of the data: the periods covered, the completeness of the exports, the currencies, and account matching. An automated check applied to an incomplete database can give a misleading impression of control.
With Geoficiency, Sixthfin offers a platform that combines the identification of anomalies and errors with the detection of accounting fraud risks. In particular, it enables users to harmonize data, configure controls, identify atypical journal entries, and centralize investigation documentation. This approach helps finance, audit, and compliance teams focus their reviews on transactions that require explanation.
Automation and artificial intelligence can help identify anomalies. However, they cannot, on their own, determine whether there is fraudulent intent. Every alert must be explainable, supported by documentation, and reviewed by a qualified individual.
What should you do when an anomaly remains unexplained?
Appoint someone to oversee the review, retain the original documents, and keep a record of the checks performed: documents reviewed, responses received, decisions made, and corrective actions taken. Involving the finance, legal, and compliance departments allows you to determine the appropriate course of action based on the facts, without turning a suspicion into an accusation.
The flow of information must remain under control. When a workplace alert system is used, the CNIL reminds users that access to the data must be strictly limited to those responsible for handling the alert or deciding on the appropriate course of action.
Finally, address the weakness that made the irregularity possible: overly broad access rights, missing supporting documents, or insufficiently independent validation. The accounting audits presented by the French Anti-Corruption Agency highlight, in particular, the importance of verifying authorizations and supporting documents. For each anomaly examined, the company must be able to trace what was audited, by whom, and with what result.