UK businesses are losing a huge amount of money by failing to detect fraudulent activity within their ranks, according to a new report.
The latest FraudTrack report, compiled by accounting firm BDO Stoy Hayward, shows there has been an alarming increase in fraud over the past six months. Reported fraud cost UK businesses about £705m in the last six months, a 74 per cent increase on the same period last year.
According to Simon Bevan, the head of BDO Stoy’s fraud services team, businesses need to be more vigilant about detecting fraud from within, particularly as the economic uncertainty deepens.
'The combination of spiralling personal debt and desperate employees spells real danger for business. Especially when, sadly, our figures provide clear evidence that commercial organisations of all types and size throughout the UK are currently failing, in some cases quite spectacularly, to get to grips with the fraudulent activity of their staff,' said Bevan.
According to the data, management fraud accounts for 46 per cent of fraud cases. The finance and insurance sectors have been the worst hit by the fraud increase, with reported fraud costing the industry about £636m, accounting for 90 per cent of the total cost of UK fraud over the past six months. But the worst is yet to come, according to Bevan.
“We are seeing a dramatic increase in banks, corporates and public sector organisations contacting us directly about our fraud investigation and prevention services and we expect this to rocket further still. Interest is coming from Board level as senior executives at British businesses are becoming increasingly concerned about fraud risk as the credit crunch bites.”