Apr, 28 2017

Dealing with frauds is always a very unpleasant experience, especially if you have to take financial responsibility for other people’s fraud as a result of carelessness and unreasonable trust. Electronic signatures (ES) are widely used in the company management. On the one hand, it helps to save time and simplify the workflow, however on the other hand it involves significant risks for the head of the company.A lot of general managers provide chief accountants with keys to their ES. That allows accountants not to bother general managers constantly for signing different documents. With this key chief accountant is able to independently sign electronic documents of any kind, as if such documents were signed by the head of the company himself. In such cases, general managers do not consider any possible risks, if the chief accountant decides to use the signature for his own advantage.IMPORTANT TO REMEMBER:Unreasonable trust may lead to significant negative consequences, including financial responsibility for company’s losses. Therefore, general managers should never forget that they are expected to act reasonably and responsibly in the interests of the company.PROVISIONS OF THE LAW:The law prohibits owners of ES to transfer their keys to third parties. General manager is obliged to supervise staff personnel and he is also in charge of accounting. If unreasonable and unfair actions of general manager lead to the company’s losses, he or she must compensate it.REAL-LIFE EXAMPLE:Chief accountant of some large company took advantage of the trust of the head of the company. He used ES of general manager to secretly confirm transfers of hundreds of millions of rubles to the accounts of front companies. Trusting relationships did not allow to detect the fraud timely. When the fraud finally became obvious, the general manager went to the police.The court found the chief accountant guilty, and obliged him to compensate company’s losses. However, the amount of compensation was equal to 15% of the total amount of fraud. The company owners decided to recover the rest amount from the general manager. During the trial in court, general manager referred to prohibition of double recovery, as well as prohibition of punishment for someone else’s crimes. He also presumed that he acted in good faith and essentially, discovered the fraud himself. The judge agreed with his arguments. However, the Court of Appeal nonetheless found the general manager responsible for failure to prevent the fraud, and obliged him to compensate the rest of amount of losses.

Author of the article
Valentina Khlavich
Managing Partner
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