Businesses in the South are being urged to step up workplace vigilance amid rising fraud in the longest economic downturn on record in a century.
The call-to-action comes from Andrew Edmonds from the South Coast office of accountancy and investment management group Smith & Williamson.
Andrew, head of assurance and business services Southampton, said: “The fraud trend in workplaces continues to rise against the difficult economic backdrop.
“Trusted personnel may be falling on hard times in the biggest squeeze on the cost of living in 60 years, which may result in them looking for opportunities to commit fraud in the workplace.
“Small-to-medium sized firms, including in the South, are more vulnerable to fraud because of less sophisticated controls, less segregation of duties, less formal oversight and more trust placed with employees.”
The scale of the problem nationally was underlined by the National Fraud Authority (NFA), with fraud climbing from £13bn in 2006 to £30bn in 2010, £38bn in 2011 and £73bn in their latest report issued in March.
Based on the latest figures, the cost to the private sector is £45.5bn, the public sector £20.3bn, individuals £6.1bn and not-for-profit businesses £1.1bn.
Nearly 80% of respondents to the NFA survey agreed that their organisation is at risk from fraud, with nearly half saying they had fallen victim in the previous 12 months.
Andrew said: “With this disturbing trend, it is vitally important that local businesses do everything they can to ensure appropriate controls are in place.
“They must assume the worst-case scenario – that fraud is already occurring in the workplace.
“The average cost of this criminal activity is estimated at 3% of turnover, which can seriously dent profits when balance sheets are already under pressure during what is reportedly the longest recession-recovery cycle in Britain in the last 100 years.”
To prevent problems, Andrew suggests firms should review basic controls, including developing a way in which employees can anonymously report fraud, and introducing:
internal spot-checks/audits
regular stock takes
a written cash-handling policy.
