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Secretive behaviour 
A High Court judge once described secrecy as 'the badge of fraud'. If an individual starts behaving 
in a more secretive way than is generally considered normal, then there may be cause for 
concern.
(b) 
Expensive lifestyles 
A well-known indicator of fraud is a lifestyle beyond an individual's earnings. A recent case 
involved an Inspector of Taxes who started driving expensive sports cars, taking lavish holidays 
and so forth. It was later discovered that he was being paid by a wealthy businessman in return 
for assisting him to evade tax.
(c) 
Long hours or untaken holidays 
Workaholics and staff who do not take their full holiday entitlement may be trying to prevent a 
temporary replacement from uncovering a fraud.
(d) 
Autocratic management style 
In some organisations a sole manager or director has exclusive control over a significant part of 
the business. This can provide ample scope for fraud, particularly when the situation is 
compounded by little, if any, independent review of those activities by anyone else at a senior 
level.
BPP Tutor Toolkit Copy

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CHAPTER 10
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IDENTIFYING AND PREVENTING FRAUD 
 
275 
(e) 
Lack of segregation of duties 
Employees occasionally have more than one area of responsibility, particularly in small 
businesses where staff numbers are low. This can make it easy for the employee to conduct and 
conceal fraudulent actions. For example, if the employee who prepares the payslips were also the 
person who authorises the payments, payroll fraud would be relatively simple to put into practice. 
(f) 
Low staff morale 
One motive for fraud is resentment towards the firm. Staff may start defrauding the firm because 
they feel that they are not rewarded sufficiently for their work or because they were passed over 
for a promotion that they believed they deserved. Alternatively, low staff morale may lead to the 
breakdown of internal controls, yielding opportunities for fraud. 
2.3 Potential for computer fraud 
Organisations are becoming increasingly dependent on computers for operational systems as well as 
accounting and management information. With this dependency comes an increased 
exposure
to fraud. 
The computer is frequently the vehicle through which fraudulent activities are carried out. 
Problems particularly associated with computers 
(a)