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January 2012 | Helen Gilbert
British businesses are being urged to take a “profit and loss approach” to
fraud risk as new figures show the activity soared last year, costing the UK
more than £2 billion.
Latest research from professional services firm BDO reveals that scams rocketed
by 50 per cent last year, up from £1.4 billion the previous year, turning out
the highest figure since the annual survey began in 2003.
The 2011 FraudTrack findings report,
which collates data from all reported fraud cases above £50,000, found that
incidents among suppliers and customers climbed to 30 per cent from 18 per cent
in 2010, with the average cost per incident of supplier/customer fraud at £7.7
This was eclipsed by tax deception, which, at just over 36 per cent, accounted
for the highest percentage of fraud committed, costing firms £13 million.
The retail sector was viewed as particularly vulnerable and accounted for 12
per cent of all fraud in 2011, compared with 2 per cent in 2010.
Finance and industry, which has dominated fraud figures in recent years,
experienced a drop in cases, and made up 27 per cent of reported fraud,
compared with 56 per cent in 2010, representing its lowest percentage for five
years. This was mainly the result of heavy investment in systems and technology
to prevent and track fraud, the study said.
The construction industry, which represented just 1 per cent of all reported
fraud, compared to 34 per cent the previous year, was blasted for not taking
the issue seriously with the low figures attributed to under-reporting.
Simon Bevan, head of fraud at BDO, said all organisations should put “trip
wires” in place to drive down risk. “Look at your P&L and the areas in
which you receive or pay the most monies, that will be where the greatest fraud
risk lies. For example if you are a cable manufacturer your greatest
expenditure may be in the purchase of copper and if you run a call centre it
may be payroll,” he said.
☛ CIPS is holding a Procurement Fraud MasterClass in London on the 7-8 February to help address some of these issues.