Fraud costing the UK £85bn a year
Research suggests fraud levels increased sharply as economy slumped
By CFOWorld.co.uk | CFO UK | Published 17:11, 20 October 11
Fraud costs the UK close to £85 billion annually and rises sharply as economic conditions worsen, according to a new study.
As much as 6.1 percent of all expenditure at public and private organisations is being lost to fraudulent activity, research by the accountancy and advisory firm PKF concluded.
The scale of fraud being committed increased by roughly a third on an annual basis as the British and world economy went in to and eventually emerged from recession, said the report, issued in conjunction with the University of Portsmouth.
Authors of the study said management staff and business leaders should focus more of their attention on the issue given the apparent extent of the resulting losses and the relative ease with which the associated damage can be limited. The onus is on bosses to be pre-emptive and take steps to influence behaviour within their organisations, the report said.
“The economic impact of fraud is clear: less financially stable and profitable companies, diminished levels of disposable income for employees, worse public services and charities deprived of much-needed resources,” said Jim Gee - director of counter fraud services at PKF and co-author of the study.
“To successfully minimise fraud, organisations need to take steps such as developing a strong anti-fraud culture, creating a meaningful deterrent effect and revising processes to remove weaknesses that provide opportunity for fraud,” he said.
The research by PKF and its partners at the University of Portsmouth looked at spending worldwide worth roughly £3.1 trillion and found that fraud losses totalled more than 3 percent of value in two-thirds of the instances being covered.
A report published earlier this week by the risk consultancy group Kroll included data suggesting that fewer company executives worldwide fell victim to fraud in the year to June 2011 compared with the prior 12 months.
Kroll’s report concluded that awareness of fraud increased last year but its authors noted a relative dearth of strategy when it comes to complying with the Bribery Act, newly introduced in the UK.
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