Member Article

Fraud Barometer - More Lessons For Employers

With Watson Burton LLP Law FirmAccounting firm KPMG has just released its annual Fraud Barometer, which analyses the number of fraud cases brought to Court in 2005. Their report highlights the growing number of fraud cases being processed by the Courts, and notes that in 2005 fraud cases reached a 10-year high with the value of fraud charges prosecuted totalling almost £1billion.

The Fraud Barometer should be of interest to every employer, as it highlights that the fraudster is often found within a business. KPMG identified that £468m of the fraud charges prosecuted in the Courts were perpetrated by management or company employees as opposed to £420m carried out by professional gangs.

This finding should reinforce to all businesses the need for tighter internal controls to counteract wayward employees. The study shows that fraudulent employees are often motivated by debts, extravagant lifestyles and addictions such as alcoholism or gambling habits.

However, the study did note one example where an employee was motivated to steal over £550,000 from her employer to fund her Elvis Presley memorabilia obsession. This particular employee managed to go 10 years without being detected by her employer. This demonstrates how easy it is for employers not to notice what is going on in their employees’ lives.Some good news however for the North East! In comparison to London and the South, which had by far the most fraud cases with approximately 32.43% of the total charges, the North East only had approximately 13.06% of all charges.

Perhaps the cold keeps North East employers on their toes! Mark Heath and Sophie Stallworthy are lawyers in Watson Burton LLP’s Commercial Fraud Practice. If you have any questions on internal fraud policies or any other fraud issues, including commercial fraud, please contact Mark Heath at Watson Burton LLP (telephone 0191 244 4306 or email mark.heath@watsonburton.com)

This was posted in Bdaily's Members' News section by Ruth Mitchell .