Internal fraud committed by employees did £225m worth of damage this year.
Posted: 9th July 2012
UK businesses now find themselves fighting more fraud than ever before, and what’s worse, fraud by management and employees is on the increase too, according to a new survey by KPMG.
From January to June 2011, UK fraud reached £1.1bn (up from £609m during the same period of 2010) with almost half (48% of incidents) hitting the private sector.
Although the majority of fraud is committed by professional criminals - with fraud perpetrated by criminal gangs rising 107% in the first half of 2011 - internal fraud committed by employees (of all levels of seniority) also did £225m worth of damage this year (up from £181m Jan – Jun 2010).
Management fraud averages at £7.3m a case, and employee fraud around £708,000.
Commenting on the research, Hitesh Patel, UK forensic partner, KPMG, said fraud levelled at UK businesses "tears at the very fabric of the economy".
He said: "Although it is just as prevalent in larger organisations, the small and medium sized companies are more likely to suffer dire consequences as a result.
"For SMEs fraud can often lead to significant cash flow problems resulting in redundancies - and at worst a fight for survival."
Patel believes that the culture and tone set at the top of a business is critical to stamping out internal fraud.
"In order to guard against professional criminals, and those operating outside the business, companies must fully assess where in their operations they are vulnerable.
"They should arm themselves with a set of controls that enable greater detection, such as whistle blowing lines and fraud risk reviews ,while thoroughly mining the wealth of data that sits within an organisation and if analysed would identify fraudulent activity,"
"This huge increase in the level of fraud hitting the private sector demonstrates the importance of ensuring that companies have mechanisms to prevent fraud and detect misconduct effectively." Patel said.