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Companies at risk from 'the enemy within'. By Dan Martin

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10th Apr 2006
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Despite one in ten firms falling prey to employee fraud, a small minority have plans in place to deal it, according to new research from accountants Grant Thornton.

The report found that 12% of businesses have been a victim of employee fraud during the past 12 months, with the theft of stock or non-cash assets the most prevalent fraudulent activity.

A quarter of affected companies saw workers stealing cash while 11% lost out to payroll fraud ' when a dishonest employee sets up false payroll details or retains the pay information of staff who have left the company.

But despite the frequency of workplace fraud, very few businesses had plans in place to prevent it or deal with the problem if it does occur.

Just 7% of the 500 firms polled had an employee fraud response programme in place, with a mere 15% running an anti-fraud policy.

Grant Thornton's Sally Longworth said: "It is clear that corporates' preparedness for employment fraud is feeble, and it appears that many are ignoring the danger of the 'enemy within'.

"Stringent internal controls are vital if employees are to be deterred from defrauding their employers, but in our experience too many crimes are uncovered by chance or by a tip off from another member of staff.

"Clearly, if businesses had more efficient checks and balances, they would leave less to chance."

The research showed employees in Scotland are the most dishonest with a fifth of firms north of the border reporting internal fraud This contrasted with just 9% of respondents in northern England and the Midlands.

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