Employee fraud

Safeguard your business

Being able to trust your team and advisors is gold standard. Ensure you are not making it easy for someone to abuse your trust. Consider these tips to safeguard your business and keep those trusted relationships strong:


"Best-practice" systems make it difficult to hide things. Review your systems periodically to ensure they are robust and meeting your organisation's changing needs. These should be well documented so they are easy for your staff to understand and work with - checklists can be a great tool to utilise to avoid potential mistakes or oversights. Have systems in place to routinely look into where your money is going, or that require you to sign off on key transactions.


Do you have regular reporting? Look for things like unusual customer refunds or credits, or spikes in new suppliers or payments. Do your sales look right? Is there a dip in cash sales? The more familiar you become with the 'norm', the sooner you will recognise any unusual activities or trends.

Buddy systems

Red flag any of your systems where only one signatory is required or only one person oversees income and expenses. Make it part of your monthly routine to run bank statements past more than one pair of eyes. Buddy systems, where staff share financial responsibilities, can strengthen your business by taking the pressure off when a signatory takes holidays. Ironically, it seems that people engaging in suspect activity tend not to take holidays for fear of being found out as they know someone else is performing their duties!

We can assist you with risk assessment for your business and help you strengthen your systems if needed.

Rental properties and "P"

Know your responsibilities

If you own a rental property or provide accommodation to your employees, you need to be aware of your responsibilities in relation to methamphetamine ("P") contamination.

The following is a brief summary which could save you thousands:

  • Landlords have a responsibility to supply a clean and safe house. Ignorance will not protect you! A recent ruling showed that a landlord 'is deemed to know' whether a property is contaminated.
  • In one case the tenant found out the property was contaminated, while the landlord was completely unaware. The landlord had to repay most rent received, and to replace most of the tenant's household items, as these were now also deemed contaminated.
  • Insurance companies will only cover some/all losses if very strict procedures have been followed, while some insurance companies completely exclude any damages related to P. Ensure you check your insurance policy!
  • New tenancy agreements – insert a clause specifically enabling you to carry out meth testing at your rental property. The Ministry of Business, Innovation and Employment (MBIE) currently does not include this clause in its standard residential tenancy agreement.
  • Unless you test your property for meth contamination before a new tenant moves in, you will be unable to prove which tenant caused contamination if a positive test result is obtained.
  • Farm worker's cottages and houses are treated no different to 'standard' residential rentals.

To safeguard yourself against potential headaches, talk to one of our friendly advisors today!

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Enforcing employment standards

It is taking time for the impact of this year's employment law changes to sink in. Parental leave and the demise of zero hours contracts received a lot of press. Enforcing employment standards has had some coverage but always sounds rather abstract in comparison. Yet this is an area that seems to bite employers.

The basic idea is to make sure employers pay at least minimum wage and give employees their proper holiday entitlements. Simple, right? However it has exposed a dramatic number of cases where employers aren't doing this. The consequences can be grim:

Penalties for serious breaches

Where an employer has committed serious breaches of employment standards, the Employment Court can now order some very heavyweight penalties as well as compensation for affected employees.

'Pecuniary' penalties may be up to $50,000 for individuals, and companies could face the greater amount of either: up to $100,000, or three times the value of whatever gain the company made from the breach. Compensation to affected employees is tied to the amount the employee lost, or was likely to lose, because of the breach.

The employer may also face being banned from being an employer, an 'officer of an employer', or even involved in employing people. An 'officer of an employer' can be a director of a company, a partner in a partnership, or anyone in an influential senior role in a business. A banning order can be in place for up to ten years: a bit limiting, if you're in business.

The law explicitly prohibits insuring against penalties for breaching employment standards. It doesn't say anything about insuring for the legal costs or compensating affected employees but it would be better not to be in the situation where you have to do this kind of breakdown.

These more draconian sanctions are in addition to those already in the armoury of Labour Inspectors.

Liability for a breach

It's in senior management's interests to make sure the business' practices are in line with employment standards because the liability doesn't stop at the business entity. Where an employer is ordered to pay money to compensate an employee and can't or won't pay, the above-mentioned 'officers of an employer' may be liable if they are involved. A person is 'involved in a breach' whether they have actively brought it about or been a party to it in any way - directly or indirectly.

In June this year, in a case preceding the latest changes, an employer was ordered to pay $161,343.67 in wage arrears, and interest at the rate of 5% per year, for breaches of minimum entitlement requirements involving 121 different employees. The employer was also ordered to pay $65,000 in penalties for failing to provide written employment agreements; failing to keep holiday records; and failing to pay holiday pay, public holiday pay and minimum wages. The sole director and major shareholder of the employer company was found liable with the company for the wage arrears.

All employers need to know what the employment standards are, and have good systems in place to meet them. It's not enough to simply say "It doesn't affect us. We're not defrauding our employees." There are enough employers out there getting it wrong with regards to holiday pay and minimum wage entitlements.  Thoroughly reviewing and appraising your current systems could prove a worthwhile exercise. Contact us if you would like more details.

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GST registration details to remote vendors

From 1 October 2016 non-resident businesses must charge and return GST where they meet the criteria to register for GST and they supply remote services (including online services) to New Zealand residents. As a New Zealand resident business, you won't be charged GST on these supplies, if:

  • you are GST-registered
  • the supplies are part of your taxable activity, and
  • you let the non-resident supplier know you're GST registered and provide your New Zealand GST registration number or business number

You will need to advise your regular non-resident suppliers as soon as possible if you are GST registered, and provide them with your GST registration number.

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