Horizon Europe works on a 7-year cycle. Framework Program 9 (FP9) is the current version, running from 2021-2027. As institutions either conclude FP9 or look to begin participating in Horizon Europe projects, many will encounter European Commission financial reporting and audit requirements that differ from the Australian grant compliance frameworks they are familiar with.

Independent audits can play an important role in demonstrating that project expenditure has been properly managed, appropriately documented, and claimed in accordance with grant requirements. Early preparation can help universities reduce compliance risk, avoid financial corrections, strengthen governance, and approach project reporting with confidence.

Horizon Europe audit quick facts

Will my university need a Horizon Europe audit?

For some Horizon Europe projects, beneficiaries are required to obtain a Certificate on the Financial Statements (CFS).

Under the general Horizon Europe requirements, a CFS is required where the total European Union contribution claimed by an individual beneficiary or affiliated entity reaches or exceeds €430,000 over the life of the project. The threshold is assessed separately for each beneficiary or affiliated entity and not at the overall consortium level. A mandatory CFS is generally submitted once at the end of the project as part of the final reporting process. The cost of a mandatory CFS is generally eligible for reimbursement under the grant, subject to the applicable grant requirements.

As university participation in Horizon Europe grows, particularly following Australia’s association arrangements, many universities may find themselves exceeding this threshold for the first time.

What does a Horizon Europe audit involve?

A Horizon Europe audit examines the financial information submitted by a beneficiary in support of grant claims.

Depending on the nature of the project, the auditor may review:

The audit focuses on whether costs have been correctly calculated, recorded in the beneficiary’s accounting records, and supported by appropriate evidence. The auditor reports their findings through the prescribed European Commission framework, while the European Commission ultimately determines cost eligibility and any financial corrections.

Why audit readiness matters

While a mandatory CFS is generally only required at the end of a project, the supporting evidence required for the audit must be generated and retained throughout the project lifecycle.

Universities that wait until final reporting often discover gaps in documentation that can be difficult, costly, or impossible to rectify years after expenditure has been incurred.

Early preparation helps institutions:

• protect valuable research funding
• identify potentially ineligible costs before submission
• strengthen time-recording and personnel cost documentation
• reduce the risk of funding clawbacks or financial corrections
• demonstrate sound governance and financial oversight
• establish repeatable processes for future Horizon Europe projects.

Audit readiness should therefore commence at project establishment rather than when a project approaches completion.

Preparing for a new compliance environment

Horizon Europe compliance is rarely the responsibility of one team. Research Offices, Finance teams, Procurement personnel, Payroll teams, Principal Investigators, and Project Managers may all contribute information that supports project expenditure claims.

Institutions should consider:

• reviewing the financial requirements contained in each grant agreement
• determining early whether a CFS is likely to be required
• assigning clear ownership for compliance activities
• mapping Horizon Europe cost categories to internal finance systems
• documenting personnel cost and time-recording methodologies
• implementing appropriate procurement and subcontracting controls
• maintaining a central repository of audit evidence
• performing periodic project reconciliations and internal compliance reviews
• budgeting for the cost and timing of independent audit requirements.

Universities that establish these disciplines from project commencement are generally better positioned to navigate both project reporting requirements and independent audit procedures.

Why this matters for universities

Many universities already manage complex assurance requirements associated with government research funding, international grants, and regulatory reporting obligations.

However, Horizon Europe introduces a distinct set of European financial compliance requirements that may be unfamiliar to research and finance teams.

As participation in Horizon Europe expands and funding levels increase, universities are likely to experience greater scrutiny over cost eligibility, documentation, personnel costs, and supporting evidence. Building capability now can help institutions scale their participation in future European research programs while protecting valuable funding outcomes.

How SW can help

SW supports universities, research institutions, and complex grant-funded organisations across Australia with assurance, compliance, and governance requirements.

Our support can include:

• audit readiness assessments for Horizon Europe
• compliance reviews and gap analyses
• review of financial systems, controls, and documentation
• guidance on eligible cost requirements
• review of personnel costs and time-recording arrangements
• procurement and subcontracting compliance reviews
• independent Horizon Europe audits and CFS engagements
• training for Research Office, Finance, and Project teams
• ongoing compliance and reporting support throughout the project lifecycle.

SW already supports universities, research institutions, and complex grant-funded organisations across Australia. Our practical experience, combined with a strong understanding of Australian and EU compliance frameworks, enables us to help you align your grant management practices with Horizon Europe requirements and ensure your projects are audit-ready from day one.

Contributors

Matthew Paull | Associate Director, Assurance and Advisory Services

The post Horizon Europe audits explained & what universities need to know appeared first on SW Accountants & Advisors.

That combination of large funding at stake, personal VC certification, and specifications that change every year is exactly why HERDC deserves the same governance and control discipline as any other significant regulatory submission. And as research funding increasingly flows across borders, from Europe and the United States as well as Canberra, universities now face not one assurance obligation, but three.

Why the risk is rising

HERDC data is pulled together from Research Offices, Finance, Faculties, and Shared Services, drawing on multiple systems and interpretations of what counts as eligible R&D income. The specifications are updated annually, usually released in draft each December and confirmed the following February, so last year’s approach is rarely a safe guide to this year’s return.

The risks we see most often are:

• misclassification of income across the four HERDC categories
• inconsistent interpretation of eligibility, particularly around shared income, affiliates, and subsidiaries, an area the specifications have repeatedly clarified
• thin supporting evidence for income included in the return, reinforcing the principle that the contract is king, if it does not read as research, it is not
• manual, key-person dependent extraction and reconciliation processes
• limited executive visibility of where the real reporting risks sit.

Left unchecked, these translate directly into funding adjustments, audit findings, regulator challenges, and reputational exposure.

Our view

Leading universities now treat HERDC as a high-risk external reporting process, not simply a funding exercise. Management should be able to demonstrate clear accountability for HERDC decisions, consistent application of the specifications, effective controls over data integrity, robust audit trails behind eligibility calls, and genuine independent challenge before the Vice-Chancellor signs.

Independent assurance is what allows executive teams and Boards to say, with evidence, that reported research income is accurate, compliant, and defensible.

Three funding streams, three different assurance obligations

This is where universities often need help separating the mandatory audit from the broader assurance they may want, and where SW can support the full research funding picture. As research partnerships globalise, more institutions now carry all three of the obligations below at once.

HERDC audit — the mandatory compliance audit (Australian funding)

Every provider must obtain a Special Purpose Audit Report under ASA 800 certifying that Category 1–4 R&D income in the return is correct, attributed to genuine R&D and to the right category, and identified by transparent transactions. The report is due to the department by 30 June each year. SW audits HERDC for clients including Deakin University, La Trobe University, Swinburne University, and Victoria University, and also runs pre-submission preparation and staff training workshops to lift return quality before the audit even starts.

Horizon audits — certifying EU-funded research spend (European funding)

Where a university draws funding from the EU’s Horizon Europe (or legacy Horizon 2020) programme, a Certificate on the Financial Statements (CFS) becomes mandatory once the EU contribution to a single beneficiary reaches €430,000.

This is a different animal to HERDC as it certifies that declared costs are real, eligible, and properly supported, delivered as an agreed-upon-procedures engagement (ISRS 4400) rather than an ASA 800 income audit, and without it, the European Commission can withhold the final payment. With Australia’s association to Horizon Europe concluded in 2026 and direct Pillar II funding flowing from January 2027, far more Australian universities will soon cross the CFS threshold.

Uniform Guidance audits — acquitting US federal research dollars (United States funding)

Australian universities are significant recipients of US Government research funding, grants from agencies such as the NIH, the Department of Defense and the National Science Foundation, received directly or as pass-through funding.

Any institution that expends US$1m or more of these federal awards in a year must obtain a Single Audit under the US Office of Management and Budget’s Uniform Guidance (2 CFR Part 200, Subpart F) a threshold recently lifted from US$750,000. Unlike HERDC, this applies an unfamiliar US framework — US GAAP reporting, cost-eligibility, and internal-control testing under US auditing standards — to funds administered a long way from Washington.

SW is the Uniform Guidance auditor for leading universities across Australia and New Zealand, delivering each engagement locally, while leveraging the extensive expertise, methodologies, and practice aids of our US partner firm, which conducts more than 100 Uniform Guidance audits internationally each year.

In short, HERDC assures research income for Australian block-grant funding. A Horizon CFS assures research expenditure for EU grant funding, and a Uniform Guidance Single Audit assures research expenditure for US federal funding. Universities with strong international research partnerships increasingly need all three.

The Horizon market is about to open & universities will need help

Until now, Horizon audits have been a niche requirement for the handful of Australian universities drawing EU research funding under third-country rules, where entities typically had to self-fund their participation. That’s changing fast, and it changes the size of the opportunity.

In June 2026, the EU and Australia concluded negotiations on Australia’s association to Horizon Europe — the EU’s €93.5bn (≈A$155bn) research and innovation programme. Australia will associate to Pillar II, worth more than €53.5bn, covering digital and industry, space, climate and energy, health, food, and the bioeconomy, priorities that map directly onto Australia’s own National Science and Research Priorities. From January 2027, under a transitional arrangement, Australian universities move from third-country status to being treated as eligible entities from an associated country, meaning direct, routine EU funding on the same terms as EU member states, including the ability to lead consortia.

The signal is already there. Australian organisations have taken part in 239 Horizon Europe projects to date, with a 24.39% application success rate, close to one in four. The Group of Eight has stepped in to fund the association fee, and universities from Sydney to Melbourne have publicly welcomed the move. As direct funding flows from 2027, the number of Australian institutions crossing the €430,000 CFS threshold, the point at which an independent Certificate on the Financial Statements becomes mandatory before the EU releases final payment will grow materially.

What this means for universities

More EU funding is unambiguously good news, but it brings an assurance obligation many Australian research offices have not had to manage at scale before. A CFS is not a HERDC audit and not a standard financial statement opinion, it’s an agreed-upon-procedures engagement against the European Commission’s prescribed template, certifying that declared costs are actually incurred, properly recorded, and eligible under the grant agreement. Get the documentation wrong and final payment can be withheld or clawed back.

How SW can help with the Horizon opportunity

SW can help universities:

• get ahead of the threshold — flag likely CFS obligations early in a project’s life and budget for them (the audit cost is itself an eligible, reimbursable project cost), so certification isn’t a scramble at final reporting
• build cost-eligibility discipline up front — align time recording, cost allocation, and documentation to EU grant agreement rules from day one, rather than reconstructing evidence years later
• deliver the CFS itself — independent, APES 110–compliant certification against the Commission’s template, drawing on our existing Horizon and Uniform Guidance experience
• join the dots across research funding — few advisors can sit across HERDC, US Uniform Guidance, and EU Horizon assurance under one roof. We already do, which lets research-finance teams consolidate their external assurance with a single sector specialist.

The universities that plan for this now, ahead of the 2027 funding switch, will avoid the late-stage documentation problems that catch first-time EU grant recipients. That’s the conversation we should be starting with our Research Office and Research Finance contacts today, on the back of the HERDC relationships we already hold.

How we help with HERDC assurance

Our independent HERDC assurance review sits alongside, not instead of, the mandatory audit, and covers:

• governance and oversight — accountability, executive and committee oversight, certification process, and escalation
• compliance — alignment to current specifications, eligibility methodology, consistent categorisation, and supporting documentation
• controls and process — end-to-end reporting, review and approval, reconciliations, and audit readiness
• data integrity — source-to-submission traceability, data quality, manual adjustments, and the reliability of management reporting.

Why SW

We know research funding assurance because we live in this sector. Our dedicated Education Industry Group has more than 50 years’ experience and has worked with 35 of Australia’s major universities.

• Laura Toscano, Director — 17 years in internal audit, risk, and compliance, leading HERDC audits across Deakin University, Swinburne University, La Trobe University, and Victoria University. Laura is a 2026 finalist in the Women in Banking & Finance awards for Risk, Regulation & Compliance and is an APRA-approved independent expert on governance and risk remediation, the exact skill set HERDC governance assurance calls for.
• Matt Paull, Associate Director — 15 years specialising in education audit, with HERDC audits for Deakin University, La Trobe University, Victoria University, and Swinburne University, as well as HERDC preparation support and staff training workshops. Matthew also manages Uniform Guidance audits across Australia and New Zealand.
• Brent Sheers, Partner — Assurance & Advisory — 12+ years delivering external audit, assurance, and financial due diligence across the listed, education, and not-for-profit sectors, and the SW Engagement Partner on our Uniform Guidance and European Horizon audits for universities. A Registered Company Auditor with both ASIC and Fairwork, Brent also sits on the Board and Finance & Audit Committee as an independent director of both a Melbourne based disability services organisation and independent girl’s school, giving him a first-hand read on exactly what Boards and audit committees expect from their auditor.
• Steve Allan, Partner — 30 years advising the sector and National Chair of our Education Focus Group, providing commercial, tax, and structuring advice to more than 30 Australian universities. Steve’s deep relationships across research and finance leadership open the door for the assurance conversation.

We also stay close to the sector’s own forums, presenting HERDC and technical updates through ARMS, AUSFOG, and university CFO and tax manager networks, so our advice reflects where the specifications and the sector are actually heading, not just where they’ve been.

Contributors

Matthew Paull | Associate Director, Assurance and Advisory Services

The post Research income & research funding assurance appeared first on SW Accountants & Advisors.

When the case reached the Western Australian District Court in Mobius Group v Inoteq, the paying company was ordered to pay the legitimate invoice all over again because it hadn’t done enough to verify the change. It effectively paid twice for the same work, losing close to $200,000.

No firewall failed, it was just a convincing email and a verification process that stopped one step short.

Why this belongs on the Board agenda

Business Email Compromise (BEC), also called payment redirection or ‘CEO fraud’, occurs when a fraudster impersonates someone trusted to trick an employee into transferring funds or changing payment details. It looks legitimate, so it slips past controls that were never designed to catch a human being deceived.

In Australia, it’s getting worse. The ACCC’s National Anti-Scam Centre reported that payment redirection scams surged by 66.6% in 2024, with business losses exceeding $30m, and that’s only what’s reported.

It’s hitting the sectors our clients operate in

The Mobius v Inoteq case is a construction and infrastructure story, precisely the environment where large contractor payments change hands constantly, and where a single altered invoice can cost hundreds of thousands.

It’s not confined to the private sector, either. In July 2025, the AFP charged a Sydney man over $3.5m fraudulently obtained from the Northern Territory Government, after the agency received an email, appearing to be from a construction company contractor, with a completed vendor form and updated bank details. The agency paid more than $3.58m to the fraudulent account before the scam was uncovered.

And the sums can be devastating for smaller organisations. A flood-damaged Victorian bowls club lost $120,000 after hackers monitored its emails, deleted a genuine builder’s invoice and replaced it with a near-identical one, changing only the BSB and account number.

The five scenarios we see most often

1. Supplier payment diversion

A supplier’s email is compromised and ‘updated’ bank details are sent through, referencing a genuine project and real invoice, exactly what happened in Mobius v Inoteq.

2. CEO (or ‘fake president’) fraud

An urgent, confidential request appears to come from a senior executive, using urgency and secrecy to discourage verification.

3. Conversation hijacking

Fraudsters monitor a genuine email thread, then insert amended payment instructions at the critical moment, common in property and construction transactions.

4. Payroll redirection

Payroll receives a legitimate-looking request to change an employee’s bank details, sending salary to a criminal account.

5. Adviser impersonation

Lawyers, consultants, or project managers are impersonated to lend credibility to a fraudulent request.

The warning signs your people can’t afford to miss

• Urgent payment requests that bypass normal processes.
• Requests for secrecy or confidentiality.
• Changes to bank account details.
• Unusual instructions ‘from’ senior executives.
• Requests made outside business hours.
• Slight variations in email domains.
• Reluctance to take part in independent verification.
• Inconsistencies between invoices, contracts, and payment details.
• Pressure to override approvals.

The lesson from the courts: Verification is now a legal duty

The most confronting takeaway from Mobius v Inoteq is that a phone call attempt wasn’t enough, the court expected the payer to actually complete independent verification before releasing funds.

As legal commentators noted, the decision means Australian businesses now carry a real duty of care to take reasonable steps against fraud, on both sides of a transaction. A follow-up ‘confirmation’ by email, to the very account that’s been compromised, offers no protection at all.

Seven questions every Board and executive team should ask

• When did we last assess fraud risk across our payment processes?
• Do we independently verify every supplier banking change — by phone, to a known number?
• Can a single person both initiate and approve a payment?
• Have we tested our controls against a realistic BEC scenario?
• Are suppliers and contractors held to the same controls as employees?
• How quickly could we actually detect and respond to a fraudulent payment?
• Do our people know how to escalate a suspected attempt?

If you suspect an incident, you should move fast

The first few hours are critical. Immediately contact your financial institution, report to Scamwatch and ReportCyber, secure affected accounts, preserve evidence, launch a forensic investigation, assess whether other payments are at risk, and fix the control failures. In the Mobius matter, only around $43,000 of the stolen funds was ever recovered.

The bottom line

Business Email Compromise extends beyond an IT problem, creating governance, fraud, and operational risks that now carry legal consequences for the party that pays. The organisations that stay ahead of it combine strong payment controls, staff awareness, rigorous supplier verification, and a tested incident response plan.

How SW can help

SW’s Fraud & Forensics team helps organisations prevent, detect, and respond to BEC and payment fraud through fraud risk assessments, payment process and control reviews, fraud control framework assessments, cyber and digital forensic investigations, incident response support, data analytics and transaction reviews, governance and control reviews, fraud awareness training, and supplier and third-party risk reviews.

For more information, you can also contact Anthony Hodgkinson directly. Anthony Hodgkinson has more than 30 years’ experience in fraud and corruption risk management, forensic investigations, financial crime, cyber and digital forensics, governance reviews, and fraud control frameworks.

The post The scam that made an Australian company pay twice appeared first on SW Accountants & Advisors.

The lesson was made plain in Victoria’s own backyard between 2013 and 2015, when a Warrnambool training company invoiced South West TAFE more than $1.8m for engineering training that was never delivered, with a parallel scheme netting a further $221,000 from Bendigo’s Kangan Institute. As government funding revenue fell from 55% in 2022 to 45.6% in 2024, dependence on fee and third‑party revenue has surged, concentrating both financial and integrity risk. For Boards and executives, fraud has moved beyond a peripheral concern to become a governance issue spanning admissions, research, payments, and payroll.

Why this requires robust oversight

Fraud in higher education rarely looks like a single large theft. It typically begins with a small control weakness nobody noticed, a provider who was never checked, a document that wasn’t verified, and an enrolment that was never real.

South West TAFE paid $1.8m for training that never happened because, as IBAC found, TAFE did not conduct any meaningful oversight of the training outsourced on its behalf, and an insider had recorded the unqualified provider as appropriately credentialled. Universities are complex, federated organisations where thousands of transactions, admissions, and grants flow through devolved faculties and third parties, each with their own processes. That complexity is precisely where fraudsters operate. The reputational damage and the misappropriation of public funds routinely exceed the immediate cash loss.

The fraud risks we see most in the sector

Admissions & qualification fraud

Just as South West TAFE never verified its provider’s credentials, universities face forged qualifications at the front door. In December 2025, authorities uncovered a nationwide fraudulent degree ring in India, seizing almost 100,000 fake degrees linked to 22 universities; Home Affairs subsequently raised four South Asian countries to Evidence Level 3, citing ‘emerging integrity issues.’ The University of Sydney detected more than 250 fraudulent applications in a single year up from just 15, many using fake diplomas and forged English language tests.

Third‑party delivery, ‘ghost colleges’ & visa‑fee rorting

The South West TAFE scam is an archetype, government money paid for training that was never confirmed to have taken place by using falsified enrolment forms and assessment workbooks the operators themselves called a ‘sausage factory.’ The same ‘pay‑without‑verify’ gap drove the VET FEE‑HELP disaster (an estimated $1.2bn in loans issued improperly across 2014–2015) and today’s ‘ghost colleges.’ As of late 2025, ASQA was handling 174 serious matters, 68% involving fraud including cash‑for‑qualifications schemes and fabricated assessments.

‘Ghost students’ & financial‑aid fraud

TayTell enrolled real people including already qualified Jetstar engineers without their knowledge to justify invoices. The modern equivalent fictitious or non‑attending identities created to extract funding is accelerating with online enrolment, with overseas regulators uncovering tens of millions in fraudulent aid and penalties running from $500,000 to over $10m per institution.

Research & grant fraud

In Australia’s first criminal convictions for academic fraud, University of Queensland researchers Bruce Murdoch and Caroline Barwood fabricated research that was never carried out, then used it as the basis for fraudulent grant applications; UQ was forced to return funds and retract publications. ‘Publish or perish’ pressure remains a key driver of data manipulation and fabrication.

Procurement fraud & conflicts of interest

The South West TAFE case turned on an insider who processed an unqualified provider through the system. Devolved purchasing and heavy consultant spending create fertile ground; the ANU spent around $54m on consultants in 2023, with contracts later revealed to have gone to a firm run by a friend of the Chancellor. Victorian audits have separately identified supplier-related fraud, such as false invoices and altered bank details, as well as undeclared conflicts of interest, contributing to multi-million-dollar losses where data analytics was not used to detect red flags.

Payroll & insider fraud

Universities employ tens of thousands of staff, and payroll remains a classic area of exposure. Ghost employees, unauthorised bank-detail changes, fictitious overtime, and payroll redirection can all occur when insiders who understand the controls exploit gaps in the system.

Contract cheating & blackmail

In February 2026, TEQSA warned all providers of aggressive commercial cheating services now operating on campus, coercing students through blackmail and exposing them to identity theft, a fraud and welfare risk combined.

Warning signs boards and executives shouldn’t ignore

• Third‑party or subcontracted delivery paid without independent confirmation it occurred.
• Providers, trainers, or staff whose qualifications were never verified.
• Enrolments with no genuine student engagement or attendance.
• An insider processing approvals, records, or database entries without oversight.
• Pressure to secure agreements or hit targets in the wake of funding cuts.
• Supplier or staff bank‑account changes processed without independent verification.
• Anomalies surfaced by outside parties (students, suppliers) rather than internal controls.

Questions every university board and executive team should ask

• Do we independently verify that outsourced or subcontracted training actually took place before paying?
• How do we confirm the qualifications of providers, trainers, and staff, and who checks the checker?
• Can a single insider award, record, or approve without independent review?
• Are admissions, enrolments, and student identities genuinely validated?
• Do we use data analytics proactively to detect red flags before funds or contracts are committed?
• When did we last run a fraud risk assessment across admissions, third‑party delivery, research, procurement, and payroll?

How SW can help

SW’s forensic specialists provide independent, experienced, and objective investigations that stand up to scrutiny. We work collaboratively with People & Culture, in-house legal, and external advisors to deliver timely, robust, and fair outcomes, no matter how sensitive the matter. Our support includes:

• independent workplace investigations and serious employee misconduct reviews
• bullying, harassment, and discrimination investigations
• conflict of interest and nepotism reviews
• misuse of corporate IT systems and social media reviews
• whistleblower and protected disclosure investigations
• code of conduct and ethics breach reviews
• fraud risk assessments, control reviews, and investigation training for in-house teams.

Talk to us

Anthony Hodgkinson, Partner – Fraud & Forensics, has more than 30 years’ experience in fraud and corruption risk management and forensic investigations. To discuss how SW can support your team, reach out to your SW advisor or contact Anthony directly.

The post Fraud in higher education: Why Australia’s universities & higher education providers are a prime target appeared first on SW Accountants & Advisors.

Australia’s hotel and pub sector remains one of the most active parts of the real estate market. Capital continues to flow, portfolios are being reshaped, and operator appetite for well-located venues remains strong. But underneath the transaction activity, the risk profile of owning and operating hospitality real estate is changing quickly.

Tax, rising costs, gaming, workforce, governance, and financial crime settings are all shifting at once — and Victoria’s recent changes provide a useful lens on the direction the rest of the country is heading.

A tougher operating environment for venues

Wage growth, energy costs, food and beverage input costs, insurance premiums, and interest expense have all reset venue P&Ls over the last three years. Margin pressure means small issues in cost control, procurement, roster management, or supplier arrangements now translate into materially larger financial impacts than they did pre-2022.

For owners running multi-venue portfolios, this is amplifying the importance of:

• consistent operating models across sites
• clear procurement and supplier controls
• disciplined capex and refurbishment governance
• accurate performance reporting at venue level
• accurate data for lender, investor, and Board reporting.

The venues that can demonstrate operational discipline are the ones commanding stronger valuations and better funding terms.

Gaming — the fastest-moving risk area

Gaming remains one of the most complex and rapidly evolving parts of the sector.

Victoria has been at the forefront of change, with mandatory carded play, load-up limits, spin rate changes, closure periods, and enhanced pre-commitment settings progressively coming into effect, together with heightened expectations around responsible gambling, staff training and record-keeping.

Other states are watching closely. NSW has been progressing cashless gaming trials and reform discussions; QLD, WA, and SA are each managing their own settings around harm minimisation, advertising, and venue obligations. The direction of travel is consistent even if the pace differs.

For hotel and pub owners, this creates a set of practical questions:

• Are gaming compliance controls documented, tested, and evidenced?
• Can we demonstrate to the regulator how staff are trained and supervised?
• Are cash-handling, reconciliation, and reporting controls robust?
• Do we have visibility across venues, or does compliance rely on individual managers?

Regulators are increasingly focused on whether venues can prove that their policies are working effectively in practice, rather than simply having them in place.

Tax — a compounding cost, not just a compliance issue

Tax is now a strategic consideration for hospitality real estate, shaping decisions well beyond the preparation and lodgement of returns.

Key pressure points include:

• Land tax — Victoria’s expanded settings, including the COVID debt levy and absentee owner surcharges, have materially reshaped hold economics for many venues. NSW, QLD, and WA each have their own settings, with land tax now a genuine driver of portfolio decisions
• Payroll tax — cross-border operators are increasingly navigating grouping rules, contractor provisions, and thresholds that vary meaningfully by state
• Windfall Gains Tax (VIC) — impacting rezoning-led development and repositioning strategies
• Duty and foreign purchaser surcharges — relevant for offshore capital and joint venture structures
• GST margin scheme and going concern — regularly under scrutiny in venue transactions
• Division 7A, trust distribution and Section 100A issues — relevant for many privately owned venue groups.

For owners looking at acquisitions, disposals, refurbishment, or repositioning, tax is now embedded in the deal thesis rather than a post-completion consideration.

Capital gains tax & restructuring considerations

The Federal Government’s proposed changes to the taxation of superannuation balances above $3m, together with ongoing scrutiny of trust, succession, and asset-holding structures, are prompting many hospitality business owners to reconsider how hotel and pub assets are owned.

For a sector where venue wealth is often held through family groups, trusts, self-managed superannuation funds, and long-term investment structures, any future changes affecting capital growth, intergenerational transfers, or exit strategies have the potential to influence acquisition, disposal, and restructuring decisions.

As venue values continue to appreciate across many markets, owners are increasingly seeking advice on capital gains tax exposure, succession planning, asset protection, and the tax implications of transferring hospitality real estate between ownership structures. This is becoming less about tax compliance and more about preserving long-term enterprise value and maintaining flexibility for future transactions and capital events.

Governance expectations are rising

Boards, lenders, and investors are asking harder questions of hospitality operators, particularly as portfolios institutionalise and private capital moves into the sector.

Areas increasingly under the spotlight:

• Risk frameworks and Board reporting — venue-level operating risks are expected to roll up into a coherent enterprise view
• Internal audit and assurance — larger groups are being asked to demonstrate independent assurance over gaming, cash, payroll, procurement, and safety controls
• Whistleblower and speak-up programs — expected across groups of any material scale, not just listed entities
• Workplace conduct — wage compliance, workplace safety, and cultural risk are now board-level topics
• Cyber and payment fraud — venues are attractive targets given the volume of daily transactions and third-party payments.

For groups eyeing capital raises, refinancing, or IPO pathways, governance maturity has become an important valuation input alongside its role in meeting compliance obligations.

AML/CTF is arriving in the real estate sector — from multiple directions

From 1 July 2026, AML/CTF obligations extended to real estate businesses, including property developers and agents. For the hospitality industry, AML/CTF now touches the sector at three levels:

1. Gaming operations — long-standing AUSTRAC obligations for gaming venues, with continued regulatory focus on cash movement, and suspicious matter reporting.
2. Property transactions — new obligations for property developers and real estate agents involved in the sale, purchase, or transfer of real estate.
3. Funds management structures — where venues sit inside managed funds, trusts, or investor syndicates, the AML/CTF governance expectations of the fund may be monitored through to the underlying operating environment.

AUSTRAC’s 2026 money laundering update also highlights the growing use of AI-enabled identity fraud, fake documentation, and impersonation, which is increasing risks and testing the control environment.

The critical question is no longer, “Do we have a policy?” It is: “Can we demonstrate that our AML/CTF controls actually work in the venue, in the transaction, and across the ownership structure?”

Capital flows are still there — but the bar is higher

Domestic and offshore capital continues to target Australian hospitality real estate, attracted by long-dated income, freehold-going-concern structures, and the perceived durability of well-located venues.

However, the diligence bar has risen. Buyers are asking sharper questions on:

• gaming compliance and revenue sustainability
• workforce and wage compliance
• tax structuring and land tax exposure
• AML/CTF and cash controls
• capex requirements and asset condition
• governance and reporting maturity.

Sellers who can front-foot these questions — with clean data, defensible controls, and clear governance — are the ones transacting at strong pricing. Those who can’t are seeing longer processes, more conditions, and greater price adjustment.

The Victorian lens

Victoria has moved earlier and further on several of these fronts — gaming reform, land tax, windfall gains, planning, and workforce settings. Whether or not other states follow the same pace, the pattern is consistent: more disclosure, more assurance, and more scrutiny.

For operators and owners, the practical implication is that the operating and governance discipline being asked of Victorian venues today is a reasonable proxy for what will be asked nationally in the next 12–24 months.

That’s the conversation on the table at the Hospitality Real Estate Summit, and the one Tim and Matthew will unpack in their fireside chat on 9 September.

How SW can help

SW’s tourism, hospitality, and gaming (THG) practice works with hotel and pub owners, operators, developers, and investors across the country, supported by specialist capability in internal audit and risk advisory, AML/CTF independent reviews, fraud and financial crime, audit, tax structuring, transactions, and corporate advisory.

If you’re grappling with any of the issues above — from gaming compliance uplift, to pre-transaction due diligence, to AML/CTF assurance, to internal audit and governance maturity — we’d welcome a conversation before or after the summit.

The post Hotels under pressure: The issues shaping the sector ahead of the Hospitality Real Estate Summit appeared first on SW Accountants & Advisors.

The proposals are particularly relevant for entities preparing Tier 2 general purpose financial statements, including subsidiaries of Tier 1 groups. While the proposed mandatory effective date for the AASB 1060 amendments is still some time away, the changes may affect how Tier 2 entities present their primary financial statements and how they plan for transition.

Why this matters

AASB 18 introduces a more structured way of presenting financial statements for Tier 1 entities. The AASB is now proposing to update AASB 1060 so that Tier 2 entities follow similar classification and presentation principles, particularly in the primary financial statements.

This is a practical development for groups with both Tier 1 and Tier 2 reporters. It should help improve consistency across group reporting packs and financial statements, especially where a Tier 1 parent is preparing to apply AASB 18.

Timing and early adoption

The proposed effective date is the annual reporting periods beginning on or after 1 July 2030. For entities with a 30 June year end, this would generally mean the first affected annual financial statements would be for the year ending 30 June 2031. For entities with a 31 December year end, this would generally be the year ending 31 December 2031.

Early application is proposed to be permitted. This may be useful for Tier 2 subsidiaries that want to align their financial statement presentation with a Tier 1 parent applying AASB 18 earlier.

However, the amendments to AASB 1060 have not yet been finalised. This means Tier 2 entities cannot yet early adopt the proposed AASB 1060 changes. Groups considering early adoption should monitor the progress of the Exposure Draft and avoid assuming that Tier 2 subsidiaries can automatically follow the parent’s AASB 18 presentation before the amendments are issued.

What is proposed to change?

The main focus of the Exposure Draft is alignment of classification and presentation requirements. In plain terms, this means changes to how information is organised and presented in the primary financial statements, including the statement of profit or loss.

A key change is the proposed requirement to present income and expenses using defined categories — operating, investing, and financing. In simple terms, this is intended to make the statement of profit or loss easier to compare between entities by showing the results of day-to-day business activities separately from returns on investments and the cost of financing.

What should Tier 2 reporters do now?

Comments on the Exposure Draft are due to the AASB by 24 August 2026. Tier 2 entities that may be affected, particularly subsidiaries in Tier 1 groups, should consider whether they want to provide feedback or raise practical implementation concerns.

How SW can help

For some entities, implementation may simply involve remapping the chart of accounts and strengthening supporting documentation. For more complex entities, particularly those involved in investing or providing finance, implementation will require more careful analysis.

We can help Tier 1 and Tier 2 reporters prepare for AASB 18 and the proposed AASB 1060 amendments by providing practical support, including:

• assessing the potential impact of AASB 18 and the proposed AASB 1060 amendments on financial statements, reporting packs, and group reporting processes
• reviewing existing financial statement templates and identifying presentation changes that may be required
• mapping income and expense line items to the new operating, investing, and financing categories
• helping management identify available presentation choices and industry-specific considerations
• supporting Tier 1 groups to align reporting instructions and subsidiary reporting packs with AASB 18
• updating accounting policies, finance team guidance, and implementation plans so the transition is managed in a structured way.

If you would like to understand how the proposed changes may affect your organisation, please contact your SW advisor to discuss the practical implications and next steps.

Contributors

Jimmy Cao | Associate Director – IFRS Advisory, Assurance and Advisory Services

The post What Tier 2 reporters need to know about the AASB 1060 Exposure Draft appeared first on SW Accountants & Advisors.

A rising challenge for employers

Workplace misconduct matters are increasing in both volume and complexity, and the growing number of cases before the Fair Work Commission shows how much is at stake when an internal investigation is poorly run. Employers who fail to apply procedural fairness and natural justice, or appoint investigators without the right skills and experience, can face adverse findings, unfair dismissal claims, and reputational damage.

The matters most often landing on People & Culture’s desk include:

• bullying, harassment, and discrimination
• serious employee misconduct
• conflicts of interest and nepotism
• misuse of corporate IT systems and social media
• substance abuse in the workplace
• whistleblower and protected disclosure complaints.

Where fraud & human resources overlap

Fraud rarely starts with a large theft; it usually starts with a small control weakness nobody noticed. Some of the most common exposures sit within human resources and payroll, where insiders understand the controls and know where the gaps are. Some examples are:

• ghost employees and payroll manipulation
• unauthorised changes to employee bank account details
• fictitious overtime or allowances
• misuse of company funds and expense claims.

Payroll redirection is also a growing fraud tactic, where People & Culture or payroll receives a legitimate-looking request to change an employee’s bank details, sending salary to criminal-controlled accounts. Strong prevention starts with segregation of duties, regular payroll and employee audits, independent review of bank account changes, and a culture that encourages people to speak up.

The role of external auditors

External auditors are often the first to surface an anomaly or an unexpected variance, a control that isn’t operating as intended, or a transaction that doesn’t reconcile. However, a statutory audit is not designed to investigate fraud or misconduct, and an audit finding is only the starting point.

When something is flagged, People & Culture and management require specialist forensic support to determine what happened, preserve evidence properly, and respond in a way that stands up if the matter escalates. SW works alongside your external audit process, picking up where the audit ends to test the underlying issue, quantify any loss, and turn a red flag into a defensible outcome.

Working with risk, compliance & internal audit to strengthen controls

The most effective organisations focus less on catching fraud and more on eliminating the opportunities that allow it to occur. That means treating each incident as a chance to fix the underlying process, not just close a file.

SW works with risk, compliance, and internal audit teams to conduct fraud risk assessments, risk and control assessments, and fraud program and procedure audits, identifying where residual risk is high or emerging, and where controls need to be tightened. After an investigation, we prepare root cause analysis and recommend corrective measures, so the same weakness isn’t exploited again, and we can build periodic reviews into your internal audit program to keep controls working as intended over time.

Why independence matters

A common mistake an organisation makes when running their own investigations is failing to pay proper attention to procedural fairness. Internal teams are rarely set up to run these matters at arm’s length, and the stakes are too high to learn on the job.

There is real value in appointing someone who does this every day, a specialist who knows how to collect, preserve, interpret and present evidence, how to plan and conduct interviews, and how to keep a matter confidential and defensible from the first allegation. That experience protects both the employee and the employer, and while it may cost more initially, expert investigators have the potential to save employers money and stress in the longer term.

Working with general counsel

Sensitive matters almost always have a legal dimension, and the best outcomes come from investigators and lawyers working in step.

Anthony and the SW forensic team work collaboratively with in-house legal, general counsel, and external legal advisors aligning on scope, evidence integrity, and privilege from the outset, so findings are legally sound and ready to support any disciplinary, regulatory, or court processes.

Having worked as a trusted advisor on highly complex investigations across government, corporates, and the banking sector, Anthony understands how to structure an investigation, so it supports, rather than complicates, the legal position.

How SW can help

SW’s forensic specialists provide independent, experienced and objective workplace investigations that stand up to scrutiny. We work collaboratively with People & Culture, in-house legal, and external advisors to deliver timely, robust, and fair outcomes, no matter how sensitive the matter. Our support includes:

• independent workplace investigations and serious employee misconduct reviews
• bullying, harassment, and discrimination investigations
• conflict of interest and nepotism reviews
• misuse of corporate IT systems and social media reviews
• whistleblower and protected disclosure investigations
• code of conduct and ethics breach reviews
• fraud risk assessments, control reviews, and investigation training for in-house teams.

Talk to us

Anthony Hodgkinson, Partner – Fraud & Forensics, has more than 30 years’ experience in fraud and corruption risk management and forensic investigations. To discuss how SW can support your team, reach out to your SW advisor or contact Anthony directly.

The post Managing fraud & inappropriate workplace behaviour: What People & Culture teams need to get right appeared first on SW Accountants & Advisors.

Fraud does not always begin with a dramatic event but can appear as a duplicated invoice, an unexplained change to a supplier’s bank account, an employee record that does not match HR files, or a payment approved outside the usual process.

While an isolated irregularity may be an administrative error, recurring exceptions or unusual patterns can indicate a wider control weakness or potential misconduct. Importantly, a red flag is not proof of fraud, but it is a signal that a transaction or process may warrant closer review.

Fraud prevention should therefore extend beyond relying on the honesty of employees and suppliers. It requires clear accountability, effective approval controls, reliable data, and a willingness to investigate activity that does not align with normal business operations.

Here are five common fraud red flags every business should know.

1. Duplicate payments

Duplicate payments occur when the same invoice or financial obligation is paid more than once. They may result from human error, inconsistent invoice processing, poor system configuration, or gaps between finance and procurement systems. However, repeated duplicate payments can also indicate deliberate invoice resubmission, manipulation of payment records, or collusion.

Warning signs may include:

• invoices with the same amount, supplier, and date but different invoice numbers
• repeated payments made within a short period
• invoices submitted through multiple channels
• slight variations in supplier names or invoice references
• duplicate payments followed by refunds to an unusual account
• payments made without a matching purchase order, contract, or evidence of delivery.

Businesses can reduce their exposure by reviewing accounts payable data for exact and near-duplicate transactions, standardising the way invoices are received, and requiring appropriate supporting documentation before payment. Duplicate-payment analytics should also account for small variations in invoice numbers, dates, descriptions, and supplier records, as exact-match testing alone may not identify every anomaly.

A duplicate payment does not necessarily mean an employee or supplier has acted dishonestly. However, where the same supplier, employee, cost centre, or approver appears repeatedly, the pattern should be examined.

2. Unusual supplier activity

Supplier and contractor relationships can create significant fraud exposure, particularly where onboarding, procurement, and payment responsibilities are concentrated among a small number of people.

Unusual supplier activity may include:

• unexpected changes to supplier bank details
• new suppliers receiving high-value payments soon after onboarding
• multiple suppliers sharing bank accounts, addresses, or contact details
• suppliers with incomplete registration or ownership information
• invoices containing vague or generic descriptions
• repeated use of one contractor without genuine market testing
• contracts or purchase orders split to remain below approval thresholds
• urgent or retrospective approvals becoming routine
• payments that do not align with the supplier’s contracted services.

The Australian Taxation Office describes false invoicing as arrangements in which invoices are issued despite no goods or services being provided. It notes that payments may be transferred to the invoicing entity before most of the amount is returned to the business owners, with the business then improperly claiming deductions or GST credits.

Unusual closeness between an employee and a supplier can also warrant attention. The Association of Certified Fraud Examiners identifies an unusually close association with a vendor or customer as a recurring behavioural red flag, while noting that the presence of a red flag does not itself establish that fraud has occurred.

Effective supplier controls should include appropriate due diligence at onboarding, independent verification of changes to payment details, and periodic reviews of supplier master data. Reviewing spend by supplier, approver, and business unit can also help identify concentrations, unusual trends, and relationships that may not be visible when individual invoices are considered separately.

3. Payroll anomalies

Payroll is often one of a business’s largest and most frequent expenditure streams. It’s a combination of sensitive employee data, recurring payments, manual adjustments, and tight processing deadlines that can create opportunities for error and misconduct.

Potential payroll fraud red flags may include:

• duplicate employee records
• multiple employees sharing the same bank account
• payments made to former or inactive employees
• unexplained or recurring manual adjustments
• unusual overtime, allowances, bonuses, or expense reimbursements
• changes to bank details shortly before a pay run
• employees without corresponding HR or onboarding records
• payroll payments that do not reconcile to approved employment terms
• inconsistent termination dates or payments.

Payroll anomalies require careful interpretation. Shared bank accounts may be legitimate, and manual payments may be necessary in some circumstances. The key is whether the transaction is supported, appropriately approved, and consistent with the employee’s status and agreed conditions.

4. Conflicts of interest

A conflict of interest arises when a person’s private, financial, family, or other interests could interfere, or appear to interfere, with their responsibilities to the organisation. Conflicts may be actual, potential, or perceived, and it is not automatically evidence of wrongdoing.

The risk increases when a conflict is not disclosed or properly managed. An employee involved in selecting a supplier, for example, may have a personal or financial connection to that business. Even if the supplier provides legitimate services, the undisclosed relationship can undermine confidence in the procurement decision and create an opportunity for favouritism, inflated pricing, confidential information sharing, or collusion.

Warning signs may include:

• an employee repeatedly directing work to the same supplier
• personal relationships between decision-makers and contractors
• unexplained resistance to competitive tendering
• gifts, hospitality, or benefits that may influence decisions
• an employee participating in decisions involving a related party
• supplier ownership or contact information linked to an employee
• procurement decisions that cannot be supported by documented evaluation criteria.

Businesses should maintain a practical conflict-of-interest framework that encourages disclosure, documents how conflicts will be managed, and requires decision-makers to step aside where appropriate. Periodic declarations can be useful, but they should be supported by training, accessible reporting channels, and controls that test for undisclosed relationships.

5. Weak approval processes

Approval processes are designed to ensure that transactions are legitimate, accurate, properly documented, and within delegated authority. When those controls are unclear, inconsistently applied, or easily overridden, the opportunity for fraud increases.

Weaknesses may include:

• one person creating a supplier, approving an invoice, and releasing payment
• shared system credentials or approval accounts
• approvals completed after a purchase or payment has occurred
• repeated use of ‘urgent’ exceptions
• transactions split to avoid delegated authority limits
• missing purchase orders, contracts, or evidence of delivery
• senior employees overriding controls without documented reasons
• approvers authorising transactions without reviewing supporting records
• staff retaining system access after changing roles or leaving the business.

Excessive control over a process or an unwillingness to share duties is recognised by the Association of Certified Fraud Examiners as a behavioural warning sign.

Segregation of duties is an important safeguard, but it must be proportionate to the organisation. Smaller businesses may not have enough employees to separate every step. In those circumstances, compensating controls could include independent bank reconciliations, owner review of payment reports, alerts for changes to supplier details, and periodic analysis of transactions processed outside standard workflows.

What to do if you identify a fraud red flag

Businesses should respond carefully and consistently when suspicious activity is identified. Immediate confrontation or premature accusations can compromise evidence, affect employee wellbeing, and create legal or procedural risks.

A proportionate initial response may include:

• preserving relevant financial records, system logs, emails, and approvals
• restricting information about the review to those who need to know
• confirming whether there is a reasonable operational explanation
• assessing whether similar transactions or relationships exist
• involving appropriate legal, HR, risk, internal audit, or forensic advisors
• considering whether access, payment, or approval controls require immediate protection
• documenting decisions and maintaining an objective record of the response.

The appropriate approach will depend on the nature and seriousness of the concern. The ATO’s current fraud and corruption framework emphasises prevention, early detection, and effective response, alongside integrating controls into decision-making and knowing how concerns should be reported.

Moving from reactive investigation to proactive fraud prevention

Finding one irregular payment may resolve an immediate issue, but it may not address the underlying weakness that allowed the transaction to occur.

A stronger fraud risk management program combines:

• clearly defined policies and responsibilities
• fraud and corruption risk assessments
• effective supplier and employee due diligence
• proportionate segregation of duties
• reliable approval and documentation requirements
• transaction monitoring and data analytics
• confidential reporting and whistleblower channels
• fraud awareness training
• regular testing of controls
• a documented incident-response process.

ASIC notes that internal audit can support corporate governance by independently reviewing and suggesting improvements to an organisation’s financial and non-financial controls, risk-monitoring processes and governance arrangements.

How SW can help

SW’s Forensic Services team can help organisations identify, assess, and manage fraud and corruption risks through practical, evidence-based support tailored to their size, sector, and risk profile.

Our services include fraud and corruption risk assessments, internal control and policy reviews, transaction and data analytics, procurement and payment reviews, integrity programs, investigations, training, and incident-response support.

If you have identified unusual transactions, supplier activity, payroll discrepancies, undisclosed relationships, or weaknesses in your approval processes, contact SW to discuss an appropriate and confidential response.

The post Five red flags that could indicate fraud in your business appeared first on SW Accountants & Advisors.

The pressure is not uniform. The housing supply challenge remains national, but the conditions differ across states. The National Housing Supply and Affordability Council Quarterly Report – March 2026 reported that, on a rolling 12-month basis, building approvals were up 8% in NSW, down 1% in Victoria, up 16% in Queensland, and up 13% in Western Australia. Building completions showed a different pattern, with NSW down 3%, Victoria down 12%, Queensland up 4%, and Western Australia up 16%.

For developers and construction businesses, this creates a sharper risk environment. Where projects are under margin pressure, approval pathways are slow, contractor capacity is stretched, or funding assumptions have shifted, the risk of fraud, misconduct, and control override can increase. This does not mean fraud is inevitable. It does mean Boards, executives, and project leaders need to be more alert to the points where commercial pressure can weaken discipline.

The issue is particularly important given the scale of financial distress in the sector. Analysis of ASIC insolvency data reported that 3,435 construction companies entered external administration for the first time in 2025–26, down from 3,596 in 2024–25, but still representing around 24.5% of all company insolvencies nationally. Construction therefore remains one of the most exposed sectors in the economy, even if the rate of insolvencies has started to ease.

For property developers, fund managers, builders, and project owners, the key question is not simply whether fraud has occurred. It is whether the organisation has the fraud risk framework, procurement controls, financial crime processes, and investigation capability to identify issues early and respond appropriately.

Procurement & contractor fraud are pressure points in major projects

Procurement remains one of the highest-risk areas in property and construction because it sits at the intersection of commercial urgency, significant spend, and complex third-party relationships.

Major projects commonly involve developers, builders, subcontractors, consultants, financiers, project managers, certifiers, planners, and suppliers. When timelines are tight and margins are under pressure, the risk of shortcuts increases. This can include inadequate due diligence on contractors, poor segregation of duties, weak review of variations, or insufficient scrutiny of supplier relationships.

The IBAC ‘procurement risks in major projects’ guidance identifies fraud, bribery, undue influence, and collusion as risks that can arise at every stage of major projects, from planning through to construction. It also identifies fraudulent invoicing, false timesheets, and overcharging as vulnerabilities in high-value and complex projects.

For private sector developers, the same risk logic applies. The highest-risk areas are often not the headline construction contracts, but the cumulative areas of spend: variations, subcontractor claims, professional services, site works, consultant fees, plant and equipment, remediation, defects rectification, and project management charges.

Common red flags include:

• repeated use of the same contractors without genuine market testing
• variation claims that lack supporting evidence or are approved under time pressure
• splitting contracts or purchase orders to stay below approval thresholds
• unusually high use of urgent or retrospective approvals
• duplicate invoices, inflated quantities, or vague descriptions of services
• conflicts between project staff and contractors
• weak documentation around tender evaluation and contractor selection.

This is where data analytics can be particularly effective. SW’s Fraud & Forensics capability includes fraud investigations, fraud risk assessments, integrity programs, data analytics, and procurement-related reviews, all of which are relevant to identifying unusual spending patterns and control gaps across complex contractor environments.

Bribery, conflicts & improper influence are not just a public sector issue

Bribery and corruption risks are often associated with public sector procurement, but the underlying behaviours can occur in private sector property and construction as well.

In a constrained market, access to opportunities, land, preferred contractors, project information, or approvals can become highly valuable. That creates risk around gifts and benefits, conflicts of interest, undisclosed relationships, side arrangements, and improper influence over procurement or commercial decisions.

The IBAC ‘corruption risks in major projects’ guidance highlights bid rigging, collusion, conflicts of interest, pressure to favour specific suppliers, fraudulent invoicing, and the involvement of multiple players as factors that can obscure oversight and facilitate corruption.

For developers and construction groups, this risk can arise in several places:

• tender processes where one bidder appears to have inside information
• employees recommending contractors with whom they have a personal relationship
• consultants influencing procurement decisions without transparent evaluation criteria
• gifts, hospitality, or informal benefits offered during tender or contract negotiation
• pressure to approve claims to preserve delivery timelines
• related-party arrangements that are poorly disclosed or documented.

A practical anti-bribery and corruption program should go beyond a policy. It should include targeted training, scenario-based awareness, conflict declarations, contractor due diligence, gifts and benefits monitoring, whistleblower pathways, and periodic testing of high-risk processes.

Project feasibility, cost pressure & reporting integrity

The economic environment is also increasing pressure around project reporting. Developers and builders are being asked to make decisions in a market where approvals, construction costs, sales rates, finance costs, and delivery timeframes can shift quickly.

The Australian Bureau of Statistics Building Approvals, Australia, May 2026 reported that total dwellings approved fell 1.1% in the month of May 2026 to 17,019, while private sector dwellings approvals, excluding houses fell 10.4% to 6,034. The same release reported that the value of total residential building approvals fell 5.7% to $10.24 billion, while non-residential building rose 41.0% to $10.83 billion.

That mix matters. Detached housing, apartments, mixed-use developments, and non-residential projects are not moving in the same way. For developers, the risk is that internal reporting does not keep pace with market reality.

Areas of concern include:

• overly optimistic feasibility assumptions
• delayed recognition of cost overruns
• understated contingency risk
• pressure to maintain forecast margins
• unsupported claims about project progress
• failure to escalate contractor distress
• insufficient challenge of sales, leasing, or funding assumptions.

These issues may not always involve deliberate misconduct. However, weak project reporting can mask problems until losses become significant. In a distressed environment, there is also greater risk of management override, selective disclosure, or pressure on finance and project teams to ‘make the numbers work’.

For Boards and executives, the focus should be on whether reporting is sufficiently independent, whether assumptions are challenged, and whether project governance provides early visibility of emerging issues.

Financial crime exposure for developers & property transactions

Financial crime is becoming more relevant to property and construction, particularly for developers involved in the sale or transfer of property.

AI is increasingly being used for identity fabrication and impersonation, false documents, and laundering scam proceeds. This is particularly relevant where developers, agents, or advisers are relying on identity documents, purchaser information, beneficial ownership declarations, or source of funds material.

Controls that should be considered include:

• customer and investor due diligence
• beneficial ownership checks
• source of funds and source of wealth enquiries
• monitoring for unusual transaction structures
• escalation pathways for suspicious matters
• staff training on red flags and reporting obligations.

SW’s Fraud & Forensics capability includes financial crime and risk assessments, transaction monitoring frameworks, financial crime controls, and regulatory compliance support.

Subcontractor failure & misconduct risk

The continuing pressure in construction creates a further integrity risk for developers and head contractors.

When contractors or subcontractors are financially distressed, several behaviours can emerge:

• inflated progress claims
• accelerated billing before work is complete
• substitution of lower-quality materials
• underpayment or non-payment of subcontractors
• phoenix activity or related-party transfers
• pressure to approve unsupported variations
• misrepresentation of capacity to complete works.

The reported ASIC-based analysis showing construction remained around 24.5% of all company insolvencies in 2025–26 indicates that sector distress remains material, notwithstanding a fall in construction insolvencies from the prior year.

For developers, this means contractor financial health should be treated as an active risk management issue, not a once-off prequalification exercise. Due diligence at appointment is important, but ongoing monitoring is equally important throughout the project lifecycle.

Practical steps include:

• financial health checks on key contractors
• review of subcontractor payment practices
• tighter approval of variations and claims
• site-based verification of work completed
• exception reporting for unusual payment patterns
• early-warning indicators for contractor distress
• independent review of high-risk claims.

This is where forensic and commercial disciplines intersect. The objective is not simply to investigate after a failure, but to identify patterns early enough to prevent loss, disruption, and reputational damage.

Cyber-enabled payment fraud & impersonation

Property and construction businesses remain attractive targets for cyber-enabled fraud because they regularly process large payments to multiple third parties.

The risk is heightened where project teams are dealing with urgent payment requests, changing bank account details, new suppliers, settlement flows, or multiple approval layers. Fraudsters do not need to compromise every control. They often only need to create enough urgency or credibility to bypass one step.

Typical scenarios include:

• false bank account change requests
• impersonation of executives, project managers, or suppliers
• compromised contractor email accounts
• fraudulent invoices inserted into real payment chains
• fake settlement or deposit payment instructions
• AI-enabled identity or document fraud.

AUSTRAC’s 2026 update specifically notes that AI is increasing the efficiency and sophistication of identity fraud, realistic fake documents, and impersonation used to access financial and non-financial systems.

For property and construction businesses, the response should include dual authorisation, independent call-back controls, payment change verification, supplier master file reviews, fraud awareness training, and incident response protocols.

SW’s capability in cyber and digital forensics, digital evidence collection, eDiscovery, cyber incident response, and data analytics is relevant where organisations need to investigate incidents, preserve evidence, understand what occurred, and strengthen controls.

What this means for property developers

For property developers, the key risk is not one single event. It is the accumulation of commercial pressure across the lifecycle of a project.

A development may begin with optimistic feasibility assumptions, move into a pressured approval or funding environment, face contractor cost escalation, absorb variation claims, encounter purchaser complexity, and then manage settlement, defects, and stakeholder scrutiny. Each stage creates different fraud and integrity risks.

Boards and executives should be asking:

• Have we updated our fraud risk assessment to reflect current market conditions?
• Are our procurement, contractor, and variation controls operating effectively?
• Do we have clear anti-bribery and corruption expectations for staff and third parties?
• Are conflicts of interest being actively managed rather than passively declared?
• Can we identify unusual payment patterns, supplier behaviour, or project cost anomalies?
• Are whistleblower and speak-up channels trusted and well understood?

The organisations best positioned to manage these risks will be those that treat fraud risk management as part of project governance, not as a reactive investigation process.

How SW can help

SW’s Fraud & Forensics team assists organisations to prevent, detect, and respond to fraud, misconduct, and financial crime risks through:

• fraud risk assessments and fraud control framework reviews
• fraud and corruption investigations
• anti-bribery and corruption risk assessments
• anti-bribery and corruption training and awareness programs
• procurement and supplier fraud reviews
• conflict of interest reviews and investigations
• whistleblower and speak-up program assessments
• governance and integrity reviews
• data analytics to identify unusual transactions, claims, and payment patterns.

Anthony Hodgkinson has more than 30 years’ experience in fraud and corruption risk management, forensic investigations, and governance advisory services. SW’s forensic capabilities span fraud and corruption investigations, workplace misconduct investigations, financial crime, cyber and digital forensics, fraud control frameworks, whistleblower programs, ethics and integrity reviews, risk assessments, and awareness training.

The post Fraud & integrity risks in property & construction: Why pressure in the market is increasing the risk profile appeared first on SW Accountants & Advisors.

While fraud is often associated with isolated incidents of theft or misconduct, today’s risks are broader and more complex. They can arise through supply chains, capital projects, ESG reporting, cyber-enabled attacks, or third-party relationships. The consequences can extend well beyond financial loss, affecting operational performance, reputation, investor confidence, and social licence.

Below are five areas that energy and mining organisations should be discussing as part of their risk and governance agenda.

1. Bribery, corruption & third-party risk

Mining and energy companies often operate across multiple jurisdictions, engaging contractors, consultants, agents, and joint venture partners to support exploration, development, and operational activities.

While these relationships are essential, they can also create exposure to bribery, corruption, and misconduct risks. Interactions with regulators, government agencies, landholders, community representatives, and third-party intermediaries can present challenges if governance frameworks are not sufficiently robust. Industry commentary continues to identify licensing processes, government interaction, and reliance on third-party representatives as key corruption risk areas within the sector.

Questions organisations should consider include:

• Do we understand our exposure to bribery and corruption risks across jurisdictions?
• Are third-party due diligence procedures operating effectively?
• Could conflicts of interest be influencing procurement or commercial decisions?
• Are whistleblower mechanisms and reporting channels working as intended?

Strong governance over third-party relationships remains one of the most effective ways to mitigate integrity risks before they become investigations.

2. Procurement & supply chain fraud

Few sectors rely on complex supply chains to the same extent as energy and mining.

Large operational sites, major capital projects, and extensive contractor networks create opportunities for procurement fraud and misconduct, particularly where oversight is fragmented or processes are inconsistent.

Common risk areas include:

• supplier collusion
• inflated or duplicate invoices
• unauthorised contract variations
• undisclosed relationships between employees and vendors
• fictitious suppliers and shell entities.

These issues are often difficult to identify through traditional financial controls alone. Increasingly, organisations are adopting data analytics and targeted fraud risk reviews to identify unusual patterns and anomalies before they lead to material losses. Supply chain fraud continues to be recognised as a significant risk across the sector.

For organisations managing significant contractor expenditure, fraud prevention should be considered an operational discipline rather than a periodic compliance exercise.

3. ESG reporting & sustainability integrity

Environmental, social, and governance (ESG) performance has become a strategic priority across the energy and mining sector.

Investors, regulators, communities, and customers are placing greater emphasis on the accuracy and reliability of sustainability-related disclosures. This includes reporting on emissions, rehabilitation obligations, water usage, environmental impacts, safety performance, and community engagement.

As reporting requirements become more sophisticated, so do the associated risks.

In many cases, issues arise not through deliberate misrepresentation but through inconsistent data sources, weak control environments, or inadequate oversight of reporting processes. Industry observers have highlighted growing scrutiny of ESG disclosures, including concerns relating to inaccurate reporting and greenwashing risks.

Boards should ask:

• Can management demonstrate the integrity of ESG data?
• Are sustainability metrics subject to the same level of scrutiny as financial information?
• Do governance processes support transparent and reliable reporting?

As sustainability performance becomes increasingly tied to access to capital and stakeholder trust, reporting integrity is no longer solely an ESG issue — it is a business-critical risk.

4. Cyber-enabled fraud & operational disruption

The digital transformation of the energy and mining sector has delivered significant operational benefits, but it has also increased exposure to cyber-enabled fraud.

Threats are no longer confined to corporate systems. Operational technology, production environments, and critical infrastructure are increasingly being targeted by sophisticated threat actors. Recent industry analysis highlights that the energy sector remains one of the most frequently targeted industries globally for cyber-attacks and ransomware activity.

Emerging risks include:

• business email compromise
• payment redirection scams
• deepfake impersonation of executives
• vendor fraud
• ransomware attacks
• data manipulation.

The challenge for many organisations is that these attacks often exploit human behaviour and trusted relationships rather than purely technical vulnerabilities.

A robust approach requires coordination between cyber security, risk management, finance, and operational teams, supported by ongoing training and awareness programs.

5. Capital projects, asset reporting & performance pressure

Large-scale capital projects are a defining feature of the energy and mining sector.

Whether developing new assets, expanding operations, or investing in infrastructure, organisations are often managing significant expenditure, multiple stakeholders, and complex commercial arrangements.

Periods of market volatility can create pressure around:

• project performance reporting
• cost forecasting
• asset valuations and impairment assessments
• production reporting
• joint venture reporting
• commercial claims and disputes.

While most organisations have established governance frameworks, history demonstrates that significant issues often emerge when commercial pressures intersect with weak oversight or insufficient challenge.

Boards should ensure there is appropriate scrutiny of key assumptions, reporting methodologies, and project governance processes, particularly on large or strategically important investments.

Looking ahead

The risks facing energy and mining companies continue to evolve. Traditional fraud risks remain relevant, but Boards are increasingly focused on broader themes including corruption, supply chain integrity, ESG reporting, cyber-enabled threats, and large-scale project governance.

The organisations that respond most effectively will be those that view fraud and integrity risks not as isolated compliance matters, but as strategic risks requiring active oversight, strong governance, and a culture of accountability.

In a sector where trust, reputation, and operational performance are critical to long-term success, proactive management of these risks is becoming a competitive advantage rather than simply a regulatory requirement.

How SW can help

SW works with energy and mining organisations to strengthen fraud risk management, internal controls, and governance through services including fraud risk assessments, internal audit, forensic investigations, procurement and third-party risk reviews, and ESG governance advisory.

If you would like to discuss how these risks may impact your organisation, reach out to your SW advisor, or contact our Fraud & Forensics or Internal Audit specialists.

The post The risks Boards are talking about: Fraud, financial crime & integrity challenges in the energy & mining sector appeared first on SW Accountants & Advisors.