There has been a significant increase in instances of fraud in the UK in the last six months, a survey has found.
Fraud losses reached £1.06bn during the first half of 2010, almost equaling fraud losses for the whole of 2008. It us the first time that fraud losses have broken the £1bn barrier in the seven years UK limited liability partnership BDO LLP has been conducting its survey.
The research also found that the average value of a single fraud has also increased to almost £6m, a £1m increase from last year.
Simon Bevan, Head of the Fraud Services Unit at BDO LLP, said: “In the past we have seen a focus on procurement type frauds i.e. UK public and private sector organisations paying too much for goods and services. However as the recession continues we are starting to see the other side of the fraud equation, namely revenue dilution fraud. We are seeing companies where management commit fraud by either setting up ‘companies within companies’ or diverting lucrative contracts away from the company to third party accomplices.”
Linked to this activity is an increase in insider dealing, according to Bevan.
BDO found that businesses in the finance and insurance sector are most at risk of fraud, with 49% of all fraud taking place in this area. Instances of mortgage fraud is also high. Unsurprisingly perhaps, they found that greed is the key motivator for fraudsters, with 85% of fraud being committed due to the desire to maintain a lavish lifestyle.
The research also found that businesses London and the South East are the victims of 71% of fraud.
Bevan added: “Fraud is as prevalent now as it has ever been and companies need to turn the vigilance screw up a couple more notches in recessionary times. The key message is to think the unthinkable, question the good, the bad and the inconvenient news, look for any anomalies in the financial statements and any significant lifestyle changes of the people around you. The regulators will impose heavy penalties so make sure you’re confident in the health of your business.”