07 August 2003 | Colleen Harris
Procurement professionals need to be more vigilant than ever against electronic payment fraud after the number of general fraud incidences surged toward a record high, according to accountants KPMG.
The number of successfully prosecuted fraud cases in the first half of this year reached 90, already exceeding the 83 cases recorded for the whole of 2002.
David Alexander, fraud investigation partner at KPMG, urged purchasers to take a stand.
"The message for purchasers around the country is to act now or you will be the next victim," he said.
"As businesses become more reliant on electronic payments than before, the associated fraud risks have increased exponentially. The controls that were adequate for the previous system are not necessarily adequate for the new system."
The total value of fraud cases for the first six months of the year was £216 million, a decrease of 15 per cent on the same period last year, according to KPMG Forensic's Fraud Barometer. However, the average value of fraud cases heard in court fell from £9 million to just £3 million.
"The fact that the amount is smaller does not lessen the impact on the company's reputation, share price or the sheer amount of management time to deal with it," Alexander said.
Detective Chief Superintendent Ken Farrow, from the City of London Police Fraud Squad, told SM: "You have really got to have some checking mechanism to make sure the people you're entering into a business relationship with are who they say they are."
Farrow said he was not surprised by KPMG's findings, adding: "We would say they're very conservative. Nobody really knows the true scale of fraud and reports like KPMG's tend to underline the increasing problem. But they can only examine a small slice when you look at the number of people they work with."
The research included major UK fraud cases - defined as those with charges over £100,000 - heard at Crown Court.