What I'd like to know is how does this go unnoticed by the directors of the company concerned?...
Fraudsters can be very clever. I know from personal experience. The company might be making loads of profit and so the directors aren't inclined to look too closely, or it might have a large number of bills to process each month, making the odd dodgy invoice difficult to spot. Senior accountants are in a good position to work fiddles, so it's important that they are scrupulously honest and policed properly. But even if the directors are on the ball, here are some ways fraudsters cover their tracks:
1. Get a junior staff member to cover for them;
2. If a senior staff member has been doing something naughty, lean on them to sign off fraudulent transactions;
3, Get a supplier involved - say by sending invoices for £10k when in reality only £9k worth of goods have been supplied, then split the difference with the supplier. See
External Link/Members Only for an example of this ;
4. Better still, set up your own company, perhaps with the help of a family member, to work the same scam as above;
5. Use 'hostesses' to work on trade fair stands, but slip in a hooker's bill with the legit invoices.
In a lot of cases, even if the original co-conspirator only intended to fiddle a few pounds, once they are compromised they can be leant on to keep up the deception. And, when the fraudster has got away with it a few times, they often start to get greedy.