Unconventional Indicators of Financial Fraud
Discover overlooked fraud warning signs, a real case study, and practical frameworks to help executives detect hidden risks early.
Uncovering What Most Companies Miss: Fraud’s Hidden Warning Signs. Financial fraud rarely starts with blatant errors. It hides in subtle clues – a manager who never takes leave, a vendor relationship that seems too close, or financial results that look too perfect.
In our latest paper, we examine unconventional indicators of financial fraud that many companies overlook, present a real-world case study, and propose a practical framework for proactive detection.
Executives who learn to spot these overlooked signals will be far better equipped to protect their organisations’ finances and reputation.
Introduction
Financial fraud is a pervasive threat that siphons an estimated 5% of revenue from companies each year. High-profile scandals and daily incidents alike demonstrate that fraudulent activity can lurk beneath the surface of healthy financial reports, often for months or years before detection. While organisations typically watch for obvious red flags – forged cheques, missing receipts, duplicate invoices – many subtle warning signs go overlooked. Fraudsters have become adept at hiding in plain sight, exploiting routine transactions and weak controls to blend illegitimate dealings into the legitimate business flow.
Executives, therefore, face a critical challenge: ensuring that their fraud detection efforts extend beyond the textbook indicators. This white paper explores unconventional or non-traditional indicators of financial fraud that most companies miss, shining a light on behavioural, cultural, and small-signal clues that can foreshadow major problems. We present a detailed case study illustrating how such overlooked indicators led to a multimillion-pound fraud, and how it was ultimately detected and addressed. Finally, we provide practical recommendations – including a proven framework – to help organisations proactively identify and respond to these subtle signals before they escalate into serious financial and reputational damage. The goal is to equip executive leaders with the insights to foster a fraud-resistant organisation by paying attention to the often-missed warning signs and embedding robust anti-fraud measures that go beyond the basics.
The Limits of Conventional Red Flags
Traditional fraud detection efforts tend to focus on well-known red flags in financial records: missing documentation, anomalies in reconciliations, duplicate billing, unexplained cash shortages, and so on. These indicators are important but not sufficient. By the time a blatant issue like a missing invoice or an unauthorised payment is noticed, a fraud scheme may have already caused substantial losses. Moreover, fraudsters intentionally avoid these obvious mistakes. They often operate within normal transaction ranges and exploit procedural loopholes to avoid triggering standard alarms. In short, if a company only looks for conventional red flags, it may develop a false sense of security while subtle fraud signals go undetected.
What do we mean by “unconventional” indicators? These are warning signs that fall outside the straightforward financial errors that basic audits catch. They might be patterns so small they appear trivial, behaviours that are easily excused as personality quirks or work ethic, or inconsistencies that lie at the intersection of finance and operations. Such indicators often masquerade as normal variance or human error. For example, a series of tiny out-of-balance entries might be written off as rounding differences, when in fact they mask a siphoning scheme. An employee’s aggressive refusal to take holidays might be praised as dedication, when it could signal fear of exposing an ongoing fraud. It takes a broader, more observant approach to recognise these clues as potential harbingers of misconduct.
Recognising unconventional indicators requires cross-functional awareness and a healthy scepticism. Executives must encourage their teams to question anomalies, however small, and to connect dots between employee behaviour, operational data, and financial outcomes. In the next section, we identify several commonly overlooked fraud indicators – spanning employee conduct, transaction patterns, accounting anomalies and organisational culture – that merit closer attention.
Overlooked Indicators of Financial Fraud
Most frauds are discovered only after significant damage, often because early subtle signs were missed or misinterpreted. Below we outline key unconventional indicators of financial fraud that companies frequently overlook.
These go beyond the standard checklist and delve into behavioural cues, small pattern anomalies, and contextual red flags that can foreshadow fraudulent activity:
Lavish Lifestyle or Personal Finance Red Flags
A perpetrator’s lifestyle often provides early clues. Employees living well beyond their means – driving luxury cars, wearing expensive jewellery, or taking extravagant trips on a modest salary – may be funding their lifestyle illicitly. Conversely, personal financial strain (heavy debts or gambling habits) can motivate fraud; staff known to have serious financial difficulties might resort to unethical acts to ease their situation. While not proof of wrongdoing, such disparities between income and lifestyle should prompt a closer look.
Never Taking Holidays or Sharing Duties
A culture of hard work is valuable, but employees who refuse to take annual leave or relinquish control of tasks can be a red flag. Fraudsters often fear that irregularities will surface if they are away, so they avoid holidays and insist on handling critical processes alone. For example, a bookkeeper who never lets anyone else reconcile the bank accounts – and declines to rotate duties or go on leave – might be hiding unauthorised transactions that only they know how to conceal. Healthy organisations enforce mandatory vacations and job rotations in finance roles to thwart this risk and ensure any concealed fraud comes to light in the employee’s absence.
Domineering or Secretive Management
An overly controlling executive can create an environment ripe for fraud. If a CEO or CFO habitually overrides controls, limits access to financial information, or discourages questions, it may indicate they’re hiding something. In many fraud cases, a charismatic, dominant leader kept employees and even auditors at bay – famously, some frauds were enabled by a culture of fear or unquestioning deference to a long-serving executive. A finance chief who silences dissent or operates with undue secrecy is a red flag. Robust governance requires that even top executives face oversight and that no individual is beyond question when it comes to financial matters.
Unusually Close Vendor or Customer Ties
Be wary if an employee or manager has an inappropriate relationship with a vendor or client. Collusion is a common fraud tactic; for instance, a procurement officer might favour a particular supplier in exchange for kickbacks. Excessive friendliness or off-record dealings with third parties – such as frequent socialising or opaque side agreements – can signal that personal interests are trumping the company’s interests. Similarly, watch for transactions with entities that have related owners or family ties to employees (related-party transactions) that aren’t properly disclosed. These “friendly” deals may involve inflated prices or fake invoices. One subtle clue can be a vendor with a name or bank account strikingly similar to a legitimate supplier – a fraudster might set up a spoofed vendor to mislead accounts payable into paying the wrong entity. Such ruses often go unnoticed if approvers skim over details.
Patterns of Small Anomalies
Rather than a single glaring discrepancy, many fraud schemes generate repeating small irregularities. For example, an employee might consistently submit expense claims or invoices just below the approval threshold to avoid scrutiny (e.g. repeatedly £4,900 when £5,000 requires a supervisor’s sign-off). Or you might spot an uptick in one-off “miscellaneous” payments lacking documentation – each individually minor, but collectively suspicious. Duplicate payments to the same vendor in different months, round-dollar payments (suggesting fabricated entries), or a series of cancelled/voided transactions can also indicate manipulation. What makes these tricky is that any one instance can look like an error; it’s the persistence of a pattern that signals intentional fraud. Companies need data analytics and alert eyes to connect these dots.
Last-Minute or Unexplained Accounting Entries
Not all fraud shows up in obvious accounts like cash disbursements; some hide in the accounting records. Frequent manual journal entries, especially near reporting deadlines or year-end, with little or no explanation, are a classic warning sign of financial statement manipulation. If you see sudden adjustments boosting revenue or reducing expenses right before a quarter closes, question it. Fraudsters will often back-date entries or use vague descriptions to plug gaps. Additionally, watch for unusual revenue and profit trends that defy reality – for instance, consistently meeting earnings targets too perfectly. In a real business, performance fluctuates; if a company magically hits every forecast to the penny, it could be smoothing results illicitly. Likewise, revenue growth without corresponding cash flow is problematic – surging sales but empty bank accounts suggest fictitious revenue or aggressive early recognition of income. Repeated changes in accounting policies (e.g. switching how revenue is recognised or assets are valued multiple times) can also indicate a strategy to conceal losses or massage figures. These accounting anomalies are subtle and often written off as “technical” matters, but they may point to deeper issues.
Operational and Financial Data Mismatches
Sometimes fraud is exposed by comparing financial records to operational reality. If the finance department reports certain numbers but operational metrics don’t line up, something is off. For example, inventory accounting fraud might be uncovered if warehouse stock counts differ greatly from what the balance sheet shows (a sign of inventory theft or falsified inventory values). Sales fraud could be indicated if reported revenue is rising while customer orders or production volumes are flat. Discrepancies between payroll records and HR rosters (ghost employees) are another example – if finance is paying more employees than HR has on file, you may have fictitious staff on the payroll. These inconsistencies between departments often slip by because each team is siloed. Smart companies cross-compare data from different sources (finance, operations, HR, etc.) to catch anomalies that any single department might miss.
Organisation Culture and HR Clues
The overall environment can also signal trouble. High turnover in the finance or accounting team is one overlooked red flag. If ethical employees sense wrongdoing, they may resign rather than be complicit – so an exodus of finance staff could mean something (or someone) is amiss. Low morale or an atmosphere of fear in the accounting department is similarly worrying. Additionally, be alert to a culture that tolerates “minor” rule-bending. Phrases like “It’s just a small amount” or a dismissive attitude toward internal controls are dangerous. Many large frauds start as small indiscretions that snowball when perpetrators realise no one is checking. Finally, over-reliance on automation with little human oversight can create a blind spot. If algorithms process transactions but no one periodically reviews exceptions or unusual outputs, fraud can slip through under the guise of system efficiency. A balanced approach uses technology but keeps expert eyes engaged to interpret anomalies and ask the uncomfortable questions.
In summary, companies need to widen their lens beyond obvious accounting errors. Behavioural changes, patterns of small irregularities, cross-department inconsistencies, and cultural factors can all be critical early indicators of fraud. Recognising these signs requires both data-driven analysis and human judgment. The following case study illustrates how several of these unconventional indicators converged in a real-world fraud scenario – and how they were finally detected and addressed.
Case Study: Dixon, Illinois – The Fraud Hiding in Plain Sight
Poster for the documentary All the Queen’s Horses, which asks: “How could one woman steal $53 million without anyone noticing?” This question became painfully real for the city of Dixon, Illinois, where an embezzlement scheme spanning 22 years went undetected until 2012. The culprit was Rita Crundwell, the trusted long-time comptroller of this small Midwestern city. Crundwell’s fraud – the largest municipal financial fraud in U.S. history – vividly illustrates how unconventional indicators were missed due to excessive trust and lax oversight.
Background:
Rita Crundwell managed Dixon’s finances for decades, gaining the full confidence of city officials. Unknown to everyone, she opened a secret bank account called the “RSCDA” account (named to sound like an official city fund) and began funnelling city money into it. Over 22 years, she fraudulently transferred nearly $54 million of public funds into this account. She used the stolen money to support a lavish lifestyle – most famously, building one of the nation’s top quarter horse breeding operations, along with owning luxury motorhomes, jewellery, and several properties. All of this on an $80,000 salary. In hindsight, her extravagant lifestyle was an obvious red flag that colleagues and citizens might have questioned. Locals observed her riding world-class horses and driving a new luxury vehicle every year, far beyond what a civil servant’s income could afford. Yet, because she was seen as a devoted employee who “made do” with budget constraints, many brushed off the lifestyle disparity, or assumed she had family money or successful side businesses.
Missed Indicators:
Several unconventional indicators in Dixon’s case went unnoticed for years. Firstly, Crundwell had almost complete control over the city’s finances, a glaring lack of segregation of duties. She handled accounting entries, wrote cheques, reconciled bank statements, and even picked up the city’s mail. This concentration of power is highly unusual – no effective internal controls were in place to require dual approvals or independent review. Because she was meticulous and the sole keeper of the books, any irregularities she created were hard for others to spot. Secondly, Rita never took a long holiday. She would be away only briefly (for example, attending horse shows) and even then remained in contact. Her reluctance to fully step away ensured no one else delved into the accounts in her absence – a classic sign of someone concealing fraud, though at the time it was seen as dedication. A third overlooked indicator was outsider complaints: when vendors or creditors occasionally said they hadn’t been paid, Crundwell provided plausible excuses and personally handled the issues. City commissioners trusted her so implicitly that they did not investigate deeper; this blind trust overrode healthy scepticism. Lastly, the city’s financial stress was oddly ever-present. Despite Dixon receiving ample tax revenue, Crundwell often reported budget shortfalls and delayed infrastructure projects. She attributed it to a tough economy, but in reality she was siphoning funds. These explanations were accepted at face value, whereas greater scrutiny might have revealed the inconsistencies between Dixon’s tax base and its perpetually strained finances.
Detection:
The Dixon fraud was finally uncovered by accident, when Crundwell took an extended vacation – the first in memory. In her absence, a subordinate city clerk opened the mail and discovered bank statements for the mysterious “RSCDA” account, an account no one else in the government recognised. Seeing large transfers of city funds to this unknown account raised immediate alarm. The mayor and law enforcement were alerted, leading to an FBI investigation. The paper trail quickly revealed the extent of Crundwell’s embezzlement. It turned out that she had been creating fake invoices made out to “Treasurer” or other fictitious payees to move money into the RSCDA account. From there, she’d spend on her personal indulgences. During the investigation, all the earlier red flags became clear in hindsight: her extravagant spending, her iron grip on financial duties, her avoidance of oversight, and the unexplained budget gaps.
Outcome:
Rita Crundwell was arrested and ultimately pled guilty to wire fraud, receiving a nearly 20-year federal prison sentence. The city seized and sold off her assets (horses, vehicles, property) to recover some of the stolen money. More importantly, Dixon implemented major changes to prevent anything similar from happening again. They overhauled internal controls, introducing strict segregation of duties – no single person would ever control accounting start-to-finish as Crundwell did. Dual signatories were required on cheques, and the city instituted regular independent audits and reconciliations of all bank accounts. The case also shattered the naivety of trust: elected officials became far more sceptical and involved in financial oversight, realising that “too much trust” enabled the fraud. Dixon’s ordeal underscores that fraud can thrive in an environment of unchecked authority and blind faith. The unconventional indicators – an employee’s outsized lifestyle and refusal to delegate or take leave – were only obvious in retrospect. The lesson for all organisations is to heed those subtle signs and ensure no employee is ever in a position to act without accountability.
Case Study: Dixon, Illinois – The Fraud Hiding in Plain Sight
Poster for the documentary All the Queen’s Horses, which asks: “How could one woman steal $53 million without anyone noticing?” This question became painfully real for the city of Dixon, Illinois, where an embezzlement scheme spanning 22 years went undetected until 2012. The culprit was Rita Crundwell, the trusted long-time comptroller of this small Midwestern city. Crundwell’s fraud – the largest municipal financial fraud in U.S. history – vividly illustrates how unconventional indicators were missed due to excessive trust and lax oversight.
Background:
Rita Crundwell managed Dixon’s finances for decades, gaining the full confidence of city officials. Unknown to everyone, she opened a secret bank account called the “RSCDA” account (named to sound like an official city fund) and began funnelling city money into it. Over 22 years, she fraudulently transferred nearly $54 million of public funds into this account. She used the stolen money to support a lavish lifestyle – most famously, building one of the nation’s top quarter horse breeding operations, along with owning luxury motorhomes, jewellery, and several properties. All of this on an $80,000 salary. In hindsight, her extravagant lifestyle was an obvious red flag that colleagues and citizens might have questioned. Locals observed her riding world-class horses and driving a new luxury vehicle every year, far beyond what a civil servant’s income could afford. Yet, because she was seen as a devoted employee who “made do” with budget constraints, many brushed off the lifestyle disparity, or assumed she had family money or successful side businesses.
Missed Indicators:
Several unconventional indicators in Dixon’s case went unnoticed for years. Firstly, Crundwell had almost complete control over the city’s finances, a glaring lack of segregation of duties. She handled accounting entries, wrote cheques, reconciled bank statements, and even picked up the city’s mail. This concentration of power is highly unusual – no effective internal controls were in place to require dual approvals or independent review. Because she was meticulous and the sole keeper of the books, any irregularities she created were hard for others to spot. Secondly, Rita never took a long holiday. She would be away only briefly (for example, attending horse shows) and even then remained in contact. Her reluctance to fully step away ensured no one else delved into the accounts in her absence – a classic sign of someone concealing fraud, though at the time it was seen as dedication. A third overlooked indicator was outsider complaints: when vendors or creditors occasionally said they hadn’t been paid, Crundwell provided plausible excuses and personally handled the issues. City commissioners trusted her so implicitly that they did not investigate deeper; this blind trust overrode healthy scepticism. Lastly, the city’s financial stress was oddly ever-present. Despite Dixon receiving ample tax revenue, Crundwell often reported budget shortfalls and delayed infrastructure projects. She attributed it to a tough economy, but in reality she was siphoning funds. These explanations were accepted at face value, whereas greater scrutiny might have revealed the inconsistencies between Dixon’s tax base and its perpetually strained finances.
Detection:
The Dixon fraud was finally uncovered by accident, when Crundwell took an extended vacation – the first in memory. In her absence, a subordinate city clerk opened the mail and discovered bank statements for the mysterious “RSCDA” account, an account no one else in the government recognised. Seeing large transfers of city funds to this unknown account raised immediate alarm. The mayor and law enforcement were alerted, leading to an FBI investigation. The paper trail quickly revealed the extent of Crundwell’s embezzlement. It turned out that she had been creating fake invoices made out to “Treasurer” or other fictitious payees to move money into the RSCDA account. From there, she’d spend on her personal indulgences. During the investigation, all the earlier red flags became clear in hindsight: her extravagant spending, her iron grip on financial duties, her avoidance of oversight, and the unexplained budget gaps.
Outcome:
Rita Crundwell was arrested and ultimately pled guilty to wire fraud, receiving a nearly 20-year federal prison sentence. The city seized and sold off her assets (horses, vehicles, property) to recover some of the stolen money. More importantly, Dixon implemented major changes to prevent anything similar from happening again. They overhauled internal controls, introducing strict segregation of duties – no single person would ever control accounting start-to-finish as Crundwell did. Dual signatories were required on cheques, and the city instituted regular independent audits and reconciliations of all bank accounts. The case also shattered the naivety of trust: elected officials became far more sceptical and involved in financial oversight, realising that “too much trust” enabled the fraud. Dixon’s ordeal underscores that fraud can thrive in an environment of unchecked authority and blind faith. The unconventional indicators – an employee’s outsized lifestyle and refusal to delegate or take leave – were only obvious in retrospect. The lesson for all organisations is to heed those subtle signs and ensure no employee is ever in a position to act without accountability.
Proactive Identification and Response Framework
The Dixon case, like many others, demonstrates that missed warning signs often result from reactive approaches to fraud. Companies that only investigate after a large anomaly surfaces are fighting an uphill battle. To protect your organisation, it’s crucial to adopt a proactive fraud risk management framework – one that systematically identifies and addresses subtle indicators before they escalate. Executives should champion a multi-pronged strategy combining policy, process, people, and technology measures.
Below are practical recommendations and a framework that organisations of all sizes can implement to better identify and respond to unconventional fraud signals:
Conduct Regular Fraud “Health Checks”
Don’t wait for the annual audit to probe for fraud. Perform periodic, targeted reviews of high-risk areas. For example, quarterly mini-audits of procurement processes, expense reimbursements, or manual journal entries can surface irregular patterns early. Rotating these checks across different departments keeps everyone aware that anomalies will be noticed. Think of it as a proactive medical check-up for your financial systems – detecting issues before they become terminal.
Define and Communicate Red Flags
Ensure that both finance professionals and operational managers are educated about the less obvious warning signs of fraud. Create a cheat sheet of red flags that includes financial and non-financial indicators. For instance, note things like “unusual journal entries near reporting deadlines” or “sudden change in supplier or customer ownership” as items to watch. Conduct workshops or briefings to discuss real examples of subtle fraud indicators (such as those in this paper) so that staff at all levels know what to look for. When people know the signals, they are far more likely to question them rather than assume everything is fine.
Strengthen Whistleblower Channels
In many fraud cases, insiders have the first suspicions. Provide safe, confidential and accessible channels for employees to report any unethical or odd activities. This could be an anonymous hotline, a third-party managed web portal, or an open-door policy with assurances against retaliation. Make it part of the culture that reporting concerns is a responsible and valued action. Often a single tip can break a case wide open – indeed, tips are consistently the top detection method in global fraud studies. But tips only come if employees trust the system and know their voices will be heard and protected.
Enforce Mandatory Leave and Job Rotation
As noted, an employee never stepping away from their duties can indicate an attempt to hide malfeasance. Institute mandatory holidays for sensitive roles and require that someone else perform their key tasks during that time. Similarly, implement job rotation or cross-training in finance – for example, every few months have staff swap responsibilities for a week. This practice not only helps with employee development but also ensures that no fraud can continue indefinitely under the exclusive control of one person. Many banks and financial institutions already enforce a two-week continuous holiday rule for traders and accountants for this very reason. All organisations should consider similar policies as a form of internal preventative control. It was precisely the lack of this in Dixon that allowed Rita Crundwell’s scheme to last so long.
Tighten Third-Party Due Diligence
Fraud schemes frequently involve outside entities (vendors, shell companies, customers) as vehicles. Strengthen your vendor and partner vetting processes. Conduct background checks on new suppliers, verify business registrations and bank account ownership, and periodically review existing vendor lists for anomalies (e.g. multiple suppliers sharing an address or bank account, which could indicate a front). High-risk transactions – such as payments to overseas partners or changes in payment instructions – should trigger additional verification steps (a quick call to a known contact, for instance). By exercising diligence with third parties, you reduce the chance of fake vendors, collusive kickback arrangements, or other external fraud traps taking root.
Scenario Planning and Staff Training
A powerful way to prepare your team is through fraud scenario exercises. Pose “what if” situations: What would you do if you noticed a colleague consistently staying late and bypassing a control? How should the team react if a usually open manager starts withholding information? By simulating these scenarios, employees learn to recognise unusual situations and practice the correct response (reporting it, escalating to audit, etc.). Training should also include case studies of past frauds, highlighting the subtle clues that were missed. This not only reinforces the red flags to watch for, but also drives home the message that fraud can happen here, not only in the headlines. Well-trained, vigilant staff are the frontline of defence.
Leverage Data Analytics and Technology
Modern analytics tools and AI can unveil patterns humans overlook. Deploy software to monitor transactions in real time and analyse large datasets for outliers. For example, expense and accounts payable data can be scanned for duplicate invoices, payments just under approval limits, or unusual spikes. Payroll data can be checked for names and addresses to spot ghost employees or duplicate bank accounts. Financial statement figures can be analysed with techniques like Benford’s Law (which helps flag fabricated numbers) and peer benchmarking. One study found that comparing a company’s revenue growth to its industry peers is one of the most effective but underused fraud indicators – if a firm’s performance is too good to be true relative to the market, it warrants increased scepticism. By integrating such analytics into your fraud risk framework, you gain a proactive early warning system. Importantly, technology should complement, not replace, human judgment – anomalies flagged by algorithms need skilled people to investigate and interpret them.
Implement a Formal Fraud Risk Management Programme
Finally, consider adopting a comprehensive framework for managing fraud risk, as advocated by experts. For instance, the joint COSO-ACFE Fraud Risk Management Guide provides a model with five key principles: establishing a fraud risk governance structure, performing regular fraud risk assessments, designing and deploying preventive and detective control activities, ensuring effective reporting and investigation processes, and monitoring the programme periodically for improvements. In practice, this means your company should have clear anti-fraud policies and tone at the top, routine assessments to identify where you’re most vulnerable, tailored controls to address those risks (from segregation of duties to system access controls), a response plan for allegations (including investigation protocols and disciplinary measures), and ongoing oversight of the whole system (e.g. via internal audit or a risk committee). In the Dixon case, such a framework would have mandated segregation of duties, rotation of personnel, and independent reviews – likely preventing the fraud or catching it far earlier. Embracing a holistic anti-fraud programme turns ad-hoc detection into an embedded part of business operations. It sends a message to staff and fraudsters alike that the organisation is watching at all levels for any irregularity, no matter how small.
By following these recommendations, companies create multiple lines of defence against fraud. The idea is to intercept the subtle signs at various points – whether through an attentive employee’s report, an analytical anomaly detected, or a control that forces second eyes on every transaction. No single measure is foolproof, but together they significantly raise the odds of catching fraud early and reduce the opportunities for unscrupulous behaviour to go unchecked.
Conclusion
Financial fraud often germinates in the shadows of complacency – thriving on those little oversights and unchecked behaviours that most companies miss. As we have explored, fraud warning signs are not always neon-lit. They can be a trusted manager’s peculiar habit of never taking a holiday, a run of “too-perfect” financial results, an employee’s mysteriously extravagant lifestyle, or a sequence of tiny anomalies dismissed as clerical errors. Individually, these signs are easy to overlook; collectively, they paint a story that executives cannot afford to ignore.
The case study of Dixon, Illinois underscored how devastating the cost of missed signals can be. It also proved that fraud is rarely a sudden event – it builds over time, leaving breadcrumbs along the way. The challenge and responsibility for leadership is to ensure those breadcrumbs are noticed and acted upon. By fostering a vigilant culture, breaking down silos between departments, and utilising frameworks and tools for proactive detection, organisations can drastically improve their fraud resilience.
In closing, executives should take to heart that effective fraud prevention and detection is about seeing the whole picture – the numbers, the people, and the patterns. Scrutinise the subtle and not just the obvious. Encourage your teams to voice concerns and reward their attentiveness. And importantly, support your anti-fraud initiatives with the same rigour and resources as any other critical risk management function. With the unconventional indicators and strategies outlined in this paper, your organisation can stay one step ahead of fraudsters, protecting your finances and reputation from harm. In the realm of financial fraud, what you don’t know can hurt you – but with awareness and action, you can ensure that very little goes unnoticed.
References
- Association of Certified Fraud Examiners (2024). Report to the Nations: Occupational Fraud 2024. (Key global fraud statistics and behavioural red flags)
- Brazel, J.F. et al. (2024). “Auditor Use of Benchmarks to Assess Fraud Risk: The Case for Industry Data.” Journal of Forensic Accounting Research. (Study showing effectiveness of comparing company performance to industry peers as a fraud indicator)
- Clayton, T. (2025). “Financial Statement Fraud Red Flags: What Auditors and Executives Miss Most.” Clark, Treglio & Cardozo P.A. Blog. (Insights on commonly overlooked signs like consistent earnings, policy changes, dominant leadership)
- Parker, P. (2023). “Case Study: The Town of Dixon Fraud.” Parker CPE Blog. (Analysis of the Rita Crundwell case – method, missed signs, and lessons learned)
- Raconteur (2025). “10 Subtle Signs of Fraud Lurking in Your Ledger.” Raconteur Finance (Insights from forensic accountants on hidden fraud red flags in companies’ ledgers)
- ACFE Insights (2024). “The 6 Most Common Behavioral Red Flags of Fraud.” ACFE Insights Blog. (Data on behavioural indicators exhibited by fraud perpetrators – e.g. living beyond means, unwillingness to share duties)
- Medius (2023). Finance Teams and Fraud Survey. (Survey of finance professionals; challenges in fraud detection and impact of AI on expense fraud)
- Trustpair (2025). “What are the most common red flags for fraud?” Trustpair Blog. (Overview of internal fraud red flags and tips for detection – living beyond means, vendor closeness, etc.)
- COSO & ACFE (2016). Fraud Risk Management Guide. (Framework for developing an anti-fraud program, including risk governance, assessment, control activities, detection, and monitoring)
- Association of Certified Fraud Examiners (2022). Occupational Fraud 2022: Report to the Nations. (Global study highlighting that 42% of frauds are detected by tips and the prevalent role of internal control weaknesses)
