Accounting Scam: Over £225,000 Stolen From Leicestershire Business

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It’s been reported in the Leicester Mercury today that an accounts manager at a Leicestershire fashion manufacturer stole £227,444 in cash over 13 years.

The theft was discovered when the culprit left the business in 2015 and her replacement soon spotted irregularities in the accounts, leaving Lux Lux Ltd based in Market Harborough, needing to borrow money from the banks and from family and friends to keep the business afloat.

What is false accounting?

False accounting is the dishonest altering, destroying, hiding or fabrication of accounts records with a view to gain for oneself, or cause loss to another. It also includes providing misleading or deceptive documents or omitting relevant documents when accounts information is requested.

Stories of false accounting, tax fraud and other such fraudulent accounting activity are unfortunately becoming increasingly prevalent.

So, what business lessons can we learn from today’s story and how can businesses protect themselves from false accounting?

Business owners: keep on top of your finances

With just one accounts manager in-house this theft would have been fairly easy to commit. If you wanted to steal money, you could either duplicate invoices from an existing supplier or you could create invoices from a fake supplier and change the bank details accordingly.

As a business owner, if you had an idea of what your accounts should look like and your margins it would be possible to spot false accounting easily. For example, in Lux Lux’s case they sell fashion wear. Speaking hypothetically, but say they expect a third of their income to be gross profit because the business owners negotiated the deals with their key suppliers for fabrics, packaging and shipping. Should they see that profit margin drop, it should really be as to how that’s happening.

Make sure your accountant’s accountable: question cash issues

Your accountant should be providing you with information about your business and spotting opportunities. An accountant’s job isn’t to check every invoice is genuine, however they should notice any change in margins or that money reserves are being eaten away.

We speak to loads of business owners who say, “our accountant never gives us profit and loss statements, or they’re 6 months out of date by the time we receive them”. Without such information being delivered proactively, it’s impossible to question the performance of your business because you’re always look too far in the past. Getting management accounts isn’t a business luxury, it’s a vital tool for managing your business.

Split accounting tasks across several people

If you have an accounts team, it is equally important to divide duties so that one person isn’t doing everything, e.g. one person does the payments and somebody else does the invoices.

If you’re the sort of business that buys a lot of stock, it’s likely you’ll get a combination of delivery notes, purchase orders and invoices which should all match up.

Usually a purchase ledger clerk is responsible for matching the order going out to the supplier, with the delivery note and the invoice that follows. If someone within your accounts team wanted to steal money, it would be far more difficult develop a purchase order that’s already been signed by a buyer, a delivery note that is usually signed by the person who takes deliveries and an invoice by someone who makes the payments.

In our business, we split the roles of a small accounts team across several people in our office. Not only is this a good measure to prevent false accounting, it is also far more efficient and productive.

Have some control still in place

In this case with Lux Lux, over £225,000 was taken over a period of 13 years – a long time for the theft to occur without detection. It’s only natural to feel absolutely confident with the team you hire and put in place to manage aspects of your business. However, giving complete control of your business’ finances to your accounts team, the beating heart of your business, just shouldn’t happen.

A statement detailing all of the invoices issued to your business from key suppliers in a month, cross referenced against the actual invoices is an example of how you could easily spot common false accounting activity.


Above are just a few things to consider to ensure your business isn’t at risk of false accounting. This list is by no means definitive, but would go a long way to protecting your company’s interests.

If you would like to discuss any of the points made above, please feel free to get in touch by calling 0116 255 2422 or by emailing one of our managers

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