Increasing fraud costs companies close to £1bn

15 March 2006

Internal fraud increases by 80 per cent

Fraud grew by 30 per cent last year, costing UK businesses nearly £1bn, according to a report released this week by accountancy firm BDO Stoy Hayward.

The research shows that more than £67m worth of fraud was committed by employees within the organisation, an annual increase of more than 80 per cent.

Firms are also losing intellectual property because of insufficient staff authentication and monitoring systems, says Andrew Durant, head of fraud investigation at BDO Stoy Hayward.

‘Data is the lifeblood of many businesses, but staff are able to print out, email or transfer records and contact details before they leave the company,’ he said.

The research also shows that half of all fraud took place in the financial services industry.

And procurement fraud grew in 2005. An Essex council worker was sentenced to 15 months in prison last year for rigging tenders for IT contracts, resulting in the council paying inflated rates for PCs, printers and software.

Firms can reduce internal fraud by putting better systems and employee screening procedures in place, says Durant.

‘Auditing systems and data mining technology could help discover anomalies,’ he said.