How to tell when your clients are lying

This article was current at the time of publication.

As artificial intelligence (AI) fuels an epidemic of online scams, accountants face new challenges in verifying information. By listening carefully and asking the right questions, accountants can help protect themselves and their clients.

While not every client is dishonest, AI’s ability to create fake invoices means that some clients may play hard and fast with the truth, which creates extra work for practitioners.

Listen to what’s being said

Former Detective Chief Inspector Robert Cockerell, now a partner at PKF, says being able to detect deception is a valuable skill that aligns naturally with the detailed and investigative nature of accounting and audit work.

“In business, you’re always at risk. You need to mitigate that risk by being able to understand how to control conversations rather than let people control you in a conversation.”

Cockerell worked for Victoria Police for 25 years. Today, he trains business professionals in the same listening and observational techniques he used in law enforcement — skills that help accountants ask better questions and extract more reliable information.

He does that by teaching practitioners to talk less and listen more.

“Most people listen to respond rather than listen to understand. But if you ask an important question, the answer must be equally as important. 

“That answer should guide your next question, until you’re satisfied with that line of inquiry,” he says.

Be sceptical

Accountants already have a healthy level of professional scepticism, Cockerell says. Tuning that skill to how clients behave and answer questions can help detect fraudulent behaviour.

“Accountants should never accept information at face value — they’re expected to challenge and verify it. You can’t fully understand a response if you’re already thinking about your next question halfway through the answer.”

His advice is to slow down, listen and look out for verbal cues.

“You’ll get better results and therefore better information [with this approach]. The better the information you get, the better the service you’ll be able to provide.”

Cockerell stresses that this soft skill is built on understanding how people communicate orally and in writing, then using this to aid verification. 

“It’s about getting better results, so you can make an informed decision.”

Use multiple sources to verify a transaction

Australians suffered A$2 billion in scam losses in 2024 . In New Zealand, total losses surpassed NZ$2.3 billion for the same period.

Fake invoices created with tools like ChatGPT are now so realistic that businesses are struggling to tell them apart from genuine receipts.

Dr Matthew Grosse, Senior Lecturer in Accounting at UTS Business School, warns that businesses can no longer rely on digital receipts as evidence of legitimate transactions.

“You need to triangulate — use multiple sources to verify a transaction,” he says. “Processes that were considered trustworthy previously now need a complete rethink.”

Some businesses may need to return to using paper receipts or invest in advanced verification systems, particularly ones that incorporate third-party data matching, to ensure all transactions are legitimate.

“It is about getting your processes right and figuring out how you can reliably trust sources of information that a couple of years ago were considered verifiable.”

The risk to businesses is growing

As AI makes forgery easier and more accessible, the risk to businesses continues to grow.

In New Zealand, a woman and her co-offender used false invoices to obtain money from investors to the tune of NZ$10 million, according to a 2022 KPMG report. In Australia, in 2024, the Serious Financial Crime Taskforce  — led by the Australian Taxation Office (ATO) – seized A$500,000 and arrested a man in New South Wales over fake invoices. 

The ATO estimates small businesses over-claiming deductions and under-reporting of income contribute to a A$8.9 billion annual tax gap — a figure likely to increase with AI-driven fraud.

“There’s going to be a range of various AI scams that will continue across text, images, video, voice and other methods. And every business is going to have to think about this a lot because losing money to fraud is a huge problem,” Grosse says.

Australian practitioners must heed the TPB

The spokesperson for the Tax Practitioners Board notes that tax agents aren’t required to audit or independently verify every document received but should exercise professional judgment and not accept information at face value. If documents seem inconsistent or suspicious, checks should be made. 

“For example, a fake invoice will likely have different payment or banking details, or a different BSB and account number to the real business. If the information provided does not seem credible or appears to be inconsistent, further enquiries would be required with the client,” the spokesperson says.

Practitioners should also report suspected fraud, especially if clients appear to be shopping around.