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03 Feb 2009
Comments:1
Fraud rocketed in 2008 according to the latest Fraud Barometer from KPMG Forensic, hitting the highest level recorded since 1995.
More than £1.1bn of fraud cases came to UK courts last year, the second highest level in the 21-year history of the survey.
Professional gangs committed £800m of fraud in 2008, but the amount of fraud committed by individuals also increased. Clubbed together, company managers, employees and customers were tried for £330m of fraud last year.
Further reading
Worryingly KPMG warns the worst is yet to come, with the bulk of the fraud committed since the start of the credit crunch not even reaching the public courts.
Hitesh Patel, fraud investigation partner at KPMG Forensic, said: “These figures are bad enough in themselves, but I fear the trend for the next couple of years will be even worse. As the global economic downturn takes hold and organisations look ever more closely at their operations, it is very likely that more fraud will come to light so that the real impact of the credit crunch on fraud is yet to be fully felt.
"Already though, the signs are there - globally in the last 12 months alone at least three alleged multi-billion pound frauds have been uncovered.”
However, despite the overall increase, the government reported a fall in public sector fraud - 56 cases worth £207m in 2008 compared with 68 cases worth £833m in 2007. VAT or carousel fraud also dropped from £700m in 2007 to £115m in 2008.
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Do you agree?
A major cause for concern should be the lack of basic controls over the spending of corporate cash
In response to news that UK companies suffered a five-fold increase in fraud last year, a major cause for concern should be the lack of basic controls over the spending of corporate cash through the purchasing process.
Despite the availability of e-procurement and automated purchase ordering solutions, the majority of organisations still run a manual purchasing process making it extremely easy for employees to place small orders for goods and services for their own use and get employers to cover the costs.
The lack of formal purchase ordering, the inability to control delivery locations, failure to use delivery notes as a means of confirming receipt, the inability to verify agreed values and total reliance on manual signatures for approval to pay for thousands of invoices combine to create an ideal opportunity for fraud.
Manual purchasing systems make it easy for individuals to defraud employers by ordering goods that are delivered to their home (and sold on eBay), by receiving commission from tame suppliers for overcharged goods and services, or by pushing bogus invoices through the system for small amounts that are unlikely to get noticed.
Only by automating the purchasing process can businesses gain visibility of all cashflow requirements from the moment a commitment is made.
As people become more desperate, the volume and value of fraud will continue to escalate, with those that are detected, and successfully prosecuted, remaining just the tip of the iceberg.
Yours sincerely,
Neil Robertson
CEO
Compleat Software
Posted by Neil Robertson | 05 Feb 2009
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