Corporate Fraud

The term is a broad label rather than a single offence. It covers frauds committed by senior managers on behalf of the company, such as inflating profits, and frauds committed by employees against it, such as diverting funds or false expenses. It also covers frauds by outsiders against the business, including fake suppliers. The common thread is that the setting is a company and the aim is gain through deception. Insider trading is sometimes grouped here but is treated as market abuse, a related but distinct offence. Corporate fraud often involves management override of controls, collusion and pressure to meet targets. It tends to surface through audits, whistleblowers or sudden cash problems. Auditors raise it with the audit committee, and regulators ask the board why oversight missed it, so the fallout reaches well beyond the individual offender.

The finance director of a listed distributor asks sales managers to record shipments in December that will actually leave in January, so that revenue meets the market's expectation. A junior accountant notices the pattern, raises it with the audit committee, and an investigation finds the practice has run for three years. The accounts are restated and the director is dismissed.