Grant Thornton Australia

Grant Thornton uses cookies to monitor the performance of this website and improve user experience. If you are happy to accept cookies from this site, please check the box. To find out more about cookies, what they are and how we use them, please see our privacy notice, which also provides information on how to delete cookies from your hard drive.

How to be COVIDSafe when visiting Grant Thornton offices. Find out how

Global site
  • Global site
  • Africa
  • Americas
  • Asia Pacific
  • Europe
  • Middle East
Grant Thorton Logo
Grant Thornton Logo Grant Thornton Logo
  • Skip to content
  • Skip to navigation
Contact us
Close Global search
  • Insights
  • Services
  • Industries
  • Meet our people
  • Careers
  • News centre
  • Locations
  • About us
  • Audit
  • Tax
  • Risk
  • Forensics
  • Deals
  • Finance and funding
  • Insolvency
  • Restructuring and turnaround
  • Business services
  • Consulting

  • Market services
  • Asia
  • Indigenous advisory
Audit Home
  • Compliance audits & reviews
  • Audit quality
  • Financial reporting advisory
  • Audit advisory
Insight How not-for-profit organisations can shift from ‘survival mode’ into sustainability
We saw COVID threaten the sustainability for many not-for-profit (NFP) organisations, forcing some to make operational changes or to shut their doors, and others to adapt and drive innovation to achieve their mission. But what does it mean to be a sustainable NFP, and how do these organisations then remain sustainable for years to come?
Tax Home
  • Corporate tax & advisory
  • Private business tax & advisory
  • Tax compliance
  • Employment tax
  • International tax
  • GST, stamp duty & indirect tax
  • Tax law
  • Research and development & government incentives
  • Transfer pricing
  • Data transformation and analytics
  • Corporate simplification
Client Alert Electric car FBT exemption expected to soon become reality
Many people are getting excited about the Government’s pre-election promise to exempt electric cars from Fringe Benefits Tax (FBT) as of 1 July 2022. But before you rush to order your new vehicle, there are a few considerations for you to take into account. While this measure is expected to take effect shortly, there is no legislation for this yet – not even in draft – and parliament’s next sitting days have not been announced. This means any new legislation will no doubt need to be retrospective to have effect from 1 July 2022.
Risk Home
  • Payroll assurance
  • Cyber resilience
  • Internal audit
  • Financial crime
  • Consumer Data Right
  • Risk management
  • Controls assurance
  • Governance
  • Regulatory compliance
Client alert Three weeks remaining for Queensland builders to comply with QBCC's Minimum Financial Reporting Requirements
With only 3 weeks remaining in the financial year, builders should immediately test their compliance with the Queensland Building and Construction Commission’s (QBCC) Minimum Financial Reporting Requirements (MFR) to ensure there is enough time to rectify any deficiencies before FY22/23 year end.
Forensics Home
  • Forensic accounting and dispute advisory
  • Investigations
  • Digital forensics
  • eDiscovery
Insight Implications of Division 7A on family settlements
Hearing the words ‘Division 7A’ is often accompanied with a twinge of anxiety – and for good reason. This area of tax legislation is incredibly complex, and for family businesses, Division 7A can be a particularly difficult concept to navigate.
Deals Home
  • Mergers and acquisitions
  • Acquisition search & strategy
  • Divestments
  • Operational deal services
  • Transaction advisory
  • Business valuations
  • Tax in mergers & acquisition
Insight Tax in M&A: M&A transactions and employer obligations – the perfect storm
There have been pressure systems gathering momentum along two fronts. Whilst they have largely gone unnoticed by many in the industry, collisions between the two have occurred and left some casualties in the M&A space. Previously, it was regarded by many deal-makers that employer obligations were quite low in risk. However, multiple enforcement agencies are focusing on unpaid employee entitlements and contract hire labour. The uptick in compliance activity has coincided with growth in the M&A space, leading many to believe there are huge levels of unquantified risk in the market – often not covered by warranty and indemnity insurance.
Finance and funding Home
  • Corporate finance
  • Debt advisory
  • Working capital optimisation
  • Capital markets
  • Capital raising
  • Private equity
  • Financial modelling
  • Payments advisory
Dealtracker Agribusiness, Food & Beverage Bite Size Dealtracker 2021
Despite numerous lockdowns throughout the COVID-19 pandemic, the essential nature of the Agribusiness, Food & Beverage sector has seen diversification and growth opportunities for many of the market participants.
Insolvency Home
  • Voluntary administration & DOCA
  • Corporate insolvency & liquidation
  • Complex and international insolvency
  • Safe Harbour advisory
  • Bankruptcy and personal insolvency
  • Creditor advisory services
  • Small business restructuring process
Client alert Can your business leverage the Small Business Restructure process to clean up old debt?
As the economy continues to battle ongoing waves of COVID-19, businesses who are struggling to pay legacy debts may be left wondering what their future might look like.
Restructuring and turnaround Home
  • Independent business reviews
  • Commercial performance
  • Safe Harbour advisory
  • Corporate simplification
  • Director advisory services
  • Debt advisory
Client alert ATO puts up to 50,000 taxpayers on alert for looming Director Penalty Notices
On 28 March, the ATO sent its strongest message on debt enforcement since the COVID-19 pandemic commenced, advising that it is now issuing letters to taxpayers informing them about their potential personal liability for company tax debts under the Director Penalty Notice (DPN) programme.
Business services Home
  • Business planning & strategy
  • Private business company secretarial services
  • Outsourced accounting services
  • Superannuation and SMSF
  • Management reporting
  • Financial reporting
  • Forecasting & budgeting
  • ATO audit support
  • Family business consulting
  • Private business taxation and structuring
  • Outsourced CFO services
Consulting Home
  • Management consulting
  • Financial consulting
Insight Top 5 issues for CFOs in 2022
Living through the pandemic has delivered a clear reminder that some things are simply beyond our forecasting or our control. That’s the kind of wildcard CFOs can do without! CFOs are in the box seat with a once-in-a-career opportunity to create a whole new – and ideally improved – business ‘normal’ by considering talent, digital transformation, cyber resilience, post-pandemic growth, diversity and inclusion.
Asia Home
  • China
  • India
  • Japan
  • Case study: Restructuring solutions
  • Agribusiness, Food & Beverage
  • Energy & Resources
  • Financial Services
  • Health & Aged Care
  • Life Sciences
  • Manufacturing
  • Not for Profit
  • Professional Services
  • Real Estate & Construction
  • Retail & Consumer Products
  • Technology, Media & Telecommunications
Agribusiness, Food & Beverage Home
CLIENT ALERT $2bn Breakthrough Victoria Fund, now investing in research, technology and innovation
The $2bn Breakthrough Victoria Fund will consider a range of investments from $500,000 to $30 million for projects across four funding streams, with a flexible approach to investment depending on the opportunity. A wide range of businesses, research organisations, universities, joint venture and consortia are encouraged to apply.
Energy & Resources Home
Guidebook A guide to transition from exploration to development and production
A deep dive into the accounting, tax and finance implications as you transition from exploration through development and ultimately, production.
Financial Services Home
Insight Holding banking to account: the real diversity and inclusion picture
We discussed some of the key findings of our Women in Business research with female industry leaders across our global Grant Thornton network, exploring how the banking sector can keep the momentum going to attract, retain and nurture women to build a more inclusive future.
Health & Aged Care Home
CLIENT ALERT $2bn Breakthrough Victoria Fund, now investing in research, technology and innovation
The $2bn Breakthrough Victoria Fund will consider a range of investments from $500,000 to $30 million for projects across four funding streams, with a flexible approach to investment depending on the opportunity. A wide range of businesses, research organisations, universities, joint venture and consortia are encouraged to apply.
Manufacturing Home
Insight Investment into innovation encouraging stability in manufacturing
Australian manufacturers have been through difficult times, particularly with the shutdown of the automotive industry, but remaining businesses are proving to be agile and resilient having already battled through lots of challenges. In addition, the accelerating pace of new technologies being introduced, combined with COVID-19 disruption and the Government’s substantial industry support, many manufacturing business models have been fundamentally challenged for the better.
Not for Profit Home
Insight How not-for-profit organisations can shift from ‘survival mode’ into sustainability
We saw COVID threaten the sustainability for many not-for-profit (NFP) organisations, forcing some to make operational changes or to shut their doors, and others to adapt and drive innovation to achieve their mission. But what does it mean to be a sustainable NFP, and how do these organisations then remain sustainable for years to come?
Professional Services Home
Client alert Professional services – is it time for our Owner’s Room?
Professional service firms have experienced growth and increased profitability over the last two years. The issue of succession – promoting, attracting and managing the retirement of equity participants – has never been more challenging.
Real Estate & Construction Home
Client Alert GST and changes in use of residential premises
As the financial year draws to a close, now is the time for property developers to review their projects and determine whether there has been a change of intended or actual use of any residential premises which may require a GST adjustment under Division 129 of the GST Act.
Retail & Consumer Products Home
We are Retail We are Retail
Our senior people have worked in retail for 25 years. That’s 25 years of experience helping some of Australia’s largest and most important businesses to be more successful. Put simply, we implement solutions that grow businesses, and our work makes a positive and profound impact on the lives of millions of people around Australia.
Technology, Media & Telecommunications Home
Client alert Digital Games Tax Offset
Income Tax Assessment Amendment (Digital Games Tax Offset) Bill 2021: Measure for Consultation
  • Careers Home
  • Working at Grant Thornton
  • Student opportunities
  • Experienced careers
  • Contact us
  • Alumni
Working at Grant Thornton Home
  • Flexibility
  • Your career and development
  • Diversity and inclusion
  • In the community
  • What we offer you
Student opportunities Home
  • Graduates
  • Vacationer Program
  • The application process
  • FAQs
  • Student application tips and tricks
  • Positions available
Experienced careers Home
  • Client spotlight
  • Positions available
    • EN
    • Contact us
    1. Home
    2. Client alerts
    3. 2015
    4. Fraud in focus: Fraud and corruption in Banking and Financial Services

    Fraud in focus: Fraud and corruption in Banking and Financial Services

    29 Apr 2015

    2015

    • Transitioning support for auto supply chain companies
    • Innovation in Australia
    • New FBT entertainment cap introduced
    • New reporting obligations for multinational companies
    • Unlocking super
    • The truth behind business failure
    • 2015 Distinguished Family Business of the Year
    • Melbourne plan refresh: The 2050 metropolitan planning strategy
    • Tax alert: GST & remote housing accommodation
    • The Federal Government's Tax discussion paper released today
    • New fees hurt developers’ bottom line
    • Payroll Tax Rebate – Action before 23 November 2015
    • New South Wales State Budget 2015-16
    • Western Australian Real estate & construction update
    • Victoria Real estate & construction update
    • South Australia Real estate & construction update
    • Queensland Real estate & construction update
    • New South Wales Real estate & construction update
    • State revenue offices and the ATO information sharing
    • Redundant corporate entities?
    • Streamlined process for new business applications
    • Imported building materials under scrutiny
    • Tightened lending rules threaten industry growth
    • Any GST hike must be offset
    • New PM appoints Minister for Cities
    • Reforming Australia’s Federation and Tax System
    • A message from our Global Head of Real Estate & Construction
    • Adelaide CBD property outlook – Key considerations
    • The deadline is looming for the Exploration Development Incentive
    • Valuing Employee Share Schemes (ESS) – Impending Tax Changes
    • Queensland State Budget 2015-16
    • New restrictions on entertainment salary packaging
    • NADA conference day three
    • NADA conference day two
    • Do you have the keys to NADA 2015? Day 1
    • South Australian State Budget 2015-16
    • 27 Pay Periods in 2015/16
    • Corporate simplification and solvent liquidations
    • Fringe Benefits – Hidden FBT and deemed dividend issues
    • NSW Payroll Tax Rebate
    • SuperStream compliance
    • Should I maintain my SMSF?
    • Art and collectables as alternative investments
    • Tax alert: GST ruling published
    • Western Australian State Budget 2015-16
    • New funding opportunities for Australian food & beverage companies
    • Victorian State Budget 2015/16
    • Encouraging innovation in Australia’s Life Sciences and Biotechnology industries
    • Fraud in focus: Fraud and corruption in Banking and Financial Services
    • Tax alert: Refunds of excess GST
    • New Employee Share Scheme Bill Introduced
    • SuperStream employer webinars
    • Staying vigilant against fraud
    • Tax Alert: Are you meeting your employment tax obligations?
    • Tax alert: No change to R&D tax offset rates
    • Act now to be ready for FATCA
    • Tax alert: Changes to Employee Share Scheme Tax Laws

    Losses from fraud and corruption are a significant impediment to achieving growth and strategic objectives of organisations in the Australian Banking and Financial Services sector.

    Media reports in recent months together with survey results, indicate that the risks of fraud and corruption in the Banking and Financial Services industry are on the rise. Allegations of fraud, corruption and insider trading reported in media in recent months combined with actual convictions indicate that these warning signs are spot on.

    According to the 2014 Global Fraud Study conducted by the Association of Certified Fraud Examiners, of all respondents survey participants in the Banking and Financial Services sector experienced the greatest number of fraud incidents in 2012/13, being 244 of which 91 were corruption cases. The study also found that the median loss for Banking and Financial Services was US$200,000.

    The Australian Banking and Financial Services sector manages and safeguards billions of dollars and failure to identify and manage risks of fraud and corruption can seriously undermine confidence in these institutions. It is also arguably one of the strongest and most respected Banking and Financial Services sectors in the world. However, there is arguably no other sector in the economy that is more vulnerable to financial and reputational loss arising from criminal conduct. 

    Leaving aside scandals involving financial planners, recent cases of alleged fraud and corruption cover the most basic traditions of mortgage fraud, insider trading and kick-backs. What is particularly challenging is the role played by employees conspiring with third parties, which significantly increases the risk that such scams will go undetected.

    Risks of good old fashioned kick-backs have been demonstrated in allegations against employees in senior management positions for receiving kick-backs from suppliers in return for awarding lucrative contracts. What is often difficult to determine is whether the employees solicited the payments in return for awarding a contract to a supplier or alternatively, did the supplier offer a bribe to employees to unduly influence their decision making, either way, such employees can be found to have perpetrated a criminal offence in these situations. The latter option often involves deliberate grooming by suppliers and sometimes over a long period of time, through generous gifts and hospitality. Such corrupt conduct, wherein the employees abuse their position of authority and trust, can cause doubt as to whether or not the employer obtained value for money in the contract awarded, given that genuine testing of the marketplace through usual procurement processes were in fact manipulated. This can result in financial loss where the supplier cannot deliver the services required or provided at higher than market rates and remedial action is subsequently required. It can be difficult to prevent and detect a form of corruption wherein two or more employees collude with a supplier. That is, usual segregation of duties and other internal controls are circumvented, creating the opportunity for bid rigging through manipulation of design requirements and tendering processes.  In summary, these issues are often much more complex than they may first appear.

    Continued risks of insider trading have also being demonstrated recently in allegations against employees as well as third parties acting in collusion. The principles of the crime are straight forward but can be difficult to detect as they involve the wrongful use of knowledge gained by an employee representing a breach of confidentiality, amongst other things.

    Examples of mortgage fraud have also been prevalent in recent months. Mortgage fraud generally involves collusion between a borrower, valuer, and a bank employee to submit and approve fraudulent loans whereby the amount lent significantly exceeds the lending ratio to the true value of the secured property. Additional conspirators sometimes include financial advisors who help prepare the finance applications. In some cases, persons involved are not intentionally complicit but are again groomed over a long period of time through initial legitimate valuations, loans and of course generous gifts and hospitality. 

    In addition, mortgage fraud can involve organised crime syndicates that  deliberately seek out potential vulnerabilities and opportunities through the use of blackmail, threats and extortion to force collusive conduct from otherwise unwilling conspirators.

    Mortgage or lending fraud is a specific area of increasing risk for lenders due to the risk that fraudulent loan agreements can result in the lender not been able to enforce its security. This issue has been raised by the case Perpetual Trustees v Xiao in the Supreme Court of Victoria, where a loan agreement contains a forged signature, the lender may not be able to rely on its registered mortgage to realise property.

    Increasing risks of fraud and corruption should serve as a wake-up call that even the best run organisations can be deceived and harmed by cunning employees and third parties bent on criminal intent. A question on the minds of many will be – “How this could happen to organisations in the highly regulated Banking and Financial Services sector?”. Reasons for failing to prevent fraud and corruption are numerous, but can generally be narrowed down to two areas.

    Firstly, in many cases organisations take actions to manage recognised risks of fraud and corruption and make informed rational decisions to accept a ‘residual risk’. That is, the organisation assesses the likelihood and impact of a fraudulent or corrupt incidents occurring and accepts that they may occur despite the level of internal controls put in place to prevent the incidents happening. This is more often than not based on a commercial decision and the organisations overall risk appetite.

    Changes in the sector in recent years which impact on risks of fraud and corruption include off-shoring of functions overseas, which can lead to previously robust internal control structures no longer operating as intended. Pressures to drive down operating costs and increase shareholder returns can lead to risk and compliance budgets not keeping pace with fraudsters’ ability to commit fraud. It is expected that the increasing threat of orchestrated cyber-crime attacks will certainly continue to receive intense focus from prevention and detection controls as well as remedial response plans.Secondly, it is sometimes the case that the organisation had not properly assessed its residual risk of a fraudulent or corrupt incidents occurring, or maybe not even identifying the risk at all.

    So what does all this fraud and corruption mean for the Australian Banking and Financial Services sector? Audit and Risk Committees must be vigilant in ensuring executive management has properly assessed their risks so they can make properly informed decisions about the risk appetite of their organisation.  

    Another question that should be asked by Audit and Risk Committees is why the fraudulent and corrupt conduct is occurring in the first place. In many cases the answer comes down to issues in the culture of the organisation or certain areas of its operations or activities. Poor culture undermines what can otherwise be a best practice fraud and corruption control framework, whereby practices and conduct are allowed and sometimes encouraged to occur in breach of policies, procedures and sometimes regulations.

    What should be done? Firstly, organisations must ensure that they have properly identified and assessed the risks that fraud and corruption will occur and harm their organisation and that appropriate policies and procedures are designed and operating to control those risks. Secondly, they must ensure that a culture of compliance with their organisations values, policies and procedures exists across all their operations and activities. Thirdly, that its employees are properly trained to ensure they have an understanding and acknowledgement of those values, policies and procedures and most importantly know how to recognise and report concerns of non-compliance and unethical conduct.

    The 2014 Global Fraud Study  results combined with recent incidents of fraud and corruption in the Australian Banking and Financial Services sector are a reminder that all sectors in our economy can and will be victims of fraud and corruption. The opportunities will be greater where a culture exists that enables perpetrators to rationalise their conduct. However, great standards of corporate governance and the right culture can still not guarantee that ‘bad apples’ will not exist and cause harm. Only time will tell whether our financial service victims are suffering from cultural issues, just a few bad apples or both.

    • Grant Thornton on Youtube
    • LinkedIn icon
    • Twitter icon
    • Facebook icon
    Connect
    • Contact us
    • Locations
    • Meet our people
    • Subscribe
    • Staff portal
    About
    • About us
    • Careers
    • News centre
    • Client alerts
    • Grant Thornton Foundation
    • Grant Thornton Affinity
    Legal
    • Privacy
    • Compliance and ethics
    • Modern slavery statement
    • Disclaimer
    • Site map

    © 2022 Grant Thornton Australia Limited – All rights reserved