Member Article

Company bosses found to be biggest fraudsters

Company insiders have been revealed as the biggest fraudsters, according to a KPMG survey.

According to forensic accounts in the Newcastle practice found that nearly two thirds of fraud by value was committed from within organisations. While the total UK fraud dropped by £727 million between January and June 2012 to £374 million, when compared to the same period in 2011.

Despite this however, the number of cases being prosecuted has seen a slight increase, from 131 in 2011 to 136 in 2012. 61% of the total value of all cases was made up by fraud committed by both management and employees.

Sara Smith of KPMG’s Newcastle Forensic practice, said: “The extent and impact of fraud perpetrated from within businesses has historically been masked by a handful of exceptionally large cases coming to court, but the fall in such ‘super’ cases now shines a spotlight on a chronic threat to businesses in these austere times.”

The largest group of perpetrators of fraud were individuals in management positions, who made up more than 50% of all cases. However employee fraud was also found to be in the rise, increasing by 10% in the same period in 2011 to £21 million.

These costs can be immensely damaging to businesses in the current climate, many of whom are already struggling to keep afloat in the current climate.

This environment, in which operations are increasingly streamlined and management’s focus may be elsewhere, offers opportunities for employees to commit fraud if oversight and controls are also cut.

Sara continued: “The pressure to cut costs remains very real in the current environment but companies would do well to set any potential savings from structural and operational changes against the risk of material losses to fraud.

“Reduced controls present an attractive opportunity for opportunistic fraud by employees who may be experiencing personal and professional financial stress.”

KPMG is now advising businesses to build up their corporate defences by establishing strong mechanisms to prevent fraud and detect misconduct effectively by taking a more proactive stance.

This includes the introduction of a strong anti-fraud tolerance culture, assessment of operations which are vulnerable to fraud and impropriety and the development of a robust response plan to address suspected and actual fraud.

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