Business fraud jumped by more than 50 per cent last year, both in terms of value and the number of cases reported, as improved efficiency from companies made questionable activities much easier to detect.
The biggest jump was in the persistently struggling retail sector, which accounted for 12 per cent of all fraud having been worth just 2 per cent in 2010. The Bribery Act and other anti-fraud measures helped the financial services and insurance industries to a decrease in the number of cases reported.
Data from the 2011 FraudTrack report, published by BDO Accountants, showed a marked increase in fraud in the UK last year, putting it at the highest since the report was first published in 2003. In 2010 372 cases of fraud were reported with an average value of 3.7 million. Last year there were 413 cases with an average value of 5 million.
Simon Bevan, BDO’s head of fraud, gave his reasons for the rise: “The fact that reported fraud is up is worrying but not surprising. In a tough economic climate there is increased focus on the bottom line and driving out unnecessary costs, so fraud is more likely to be uncovered, however, organisations need to be more proactive in preventing fraud in the first place. Prevention teams are often too externally focused or refuse to look at fraud from a financial perspective.”
Having previously been one of the most common industries for fraudsters to use as cover, finance and insurance companies accounted for 27 per cent of all fraud, down from 56 in 2010 and the lowest total for the past 5 years.
Mr. Bevan offered some advice on fraud protection for business owners: “Organisations should take a profit and loss approach to fraud risk, the areas where the largest monies are paid or received will the most likely targets for fraud. You can’t design all fraud risk out of a business but you can put trip wires in place.”.