In: Accounting
Prompt:
A popular method for defrauding a company is to issue a phony invoice. The scam begins by initially contacting the target firm to discover details of key business contacts, business operations, and products. The swindler then uses this information to create a fictitious invoice. The invoice will include names, figures, and other details to give it the appearance of legitimacy. Scott County Schools was a victim of the above scam in 2017.
Scott County Schools in Kentucky announced that it was the victim of a major attack that resulted in a loss of $3.7 million. This was a typical invoice scam where the school was notified that an invoice was outstanding, the school duly paid the fake invoice. Once the fact this was a wire fraud incident, the FBI was contacted, and attempts were made to recover the funds. Initially, it was it is unclear whether it will be possible to recover the money. Just today it was confirmed that the school district in Kentucky recovered the $3.7 million stolen by the hacker in this cyber wire fraud scam.
Phony or Fake invoices can cause a business a great deal of harm as even indicated in the given case study. In order to check how it can be avoided, the intention of creating fake invoices should be checked so that appropriate action can be taken accordingly:
To avoid such practises, companies should make stringent policies such as:
Please note there could be many more ways to tackle the issue varying due to business to business. Thus, the above points are generic and thus could be applied with modification or by combination of above points to come to a solution.