Credit crunch sees fraud levels break new records
KPMG’s forensic fraud barometer saw more than £1.1 billion come to UK courts in 2008, the second-highest figure ever recorded. Professional gangs have remained extremely active, notching up £800 billion, but the increase is largely attributable to fraud perpetrated by individuals, the Big Four firm says.
Company mangers, employees and customers were tried for over £300 million of fraud last year, three times the value seen in 2007.
Continued...
The full article is available to registered AccountingWEB members only. To read the rest of this article you’ll need to login or register.
Registration is FREE and allows you to view all content, ask questions, comment and much more.
Or if you are already registered, login here
A major cause for concern should be the lack of basic controls o
In response to news that UK companies suffered a five-fold increase in fraud last year, a major cause for concern should be the lack of basic controls over the spending of corporate cash through the purchasing process.
Despite the availability of e-procurement and automated purchase ordering solutions, the majority of organisations still run a manual purchasing process making it extremely easy for employees to place small orders for goods and services for their own use and get employers to cover the costs.
The lack of formal purchase ordering, the inability to control delivery locations, failure to use delivery notes as a means of confirming receipt, the inability to verify agreed values and total reliance on manual signatures for approval to pay for thousands of invoices combine to create an ideal opportunity for fraud.
Manual purchasing systems make it easy for individuals to defraud employers by ordering goods that are delivered to their home (and sold on eBay), by receiving commission from tame suppliers for overcharged goods and services, or by pushing bogus invoices through the system for small amounts that are unlikely to get noticed.
Only by automating the purchasing process can businesses gain visibility of all cashflow requirements from the moment a commitment is made.
As people become more desperate, the volume and value of fraud will continue to escalate, with those that are detected, and successfully prosecuted, remaining just the tip of the iceberg.
Yours sincerely,
Neil Robertson
CEO
Compleat Software
www.compleatsoftware.com
And another thing . . .
The KPMG Fraud Barometer reflects cases which come to Court in which the charge is of fraud in a sum of £100,000 or more.
In the nature of criminal justice there may be a significant time lapse between the discovery of a suspected fraud and the matter coming to court. There are also a large number of suspected frauds which never come to court at all (either because they are not reported to the authorities or because there is insufficient evidence to prosecute). Added to that there are the frauds which have not been uncovered!
Finally there are frauds of less than £100,000 which are not picked up by the KPMG Barometer.
The KPMG figures are undoubtedly interesting, but need to be seen in context. The true extent of fraud currently can only be guessed at!
David