Fraud levels hit record high

10 January 2012

Want the latest procurement and supply chain news delivered straight to your inbox? Sign up for the Supply Management Daily

10 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 million.

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.

LATEST
JOBS
Swindon, Wiltshire
upto £40K base (+ Paid overtime and corporate benefits)
Honda Manufacturing Ltd
Kew gardens, Richmond upon Thames, London (Greater)
£37,000 - £42,500 per annum pro rata, depending on skills and experience
Kew Royal Botanic Gardens
SEARCH JOBS
CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates
GO TO CIPS KNOWLEDGE