Sir – employee-led fraud is continuing to go undetected within UK businesses. There is currently no regulatory requirement to state fraud losses in a company’s accounts, a procedure which would actually focus the minds of management on this issue. Nor will any successful company – without glaring financial black holes! – feel the need to rock the boat and undermine staff morale by introducing punitive fraud prevention policies.

The end result is that, on average, organisations are losing between 3% and 5% of annual revenues to fraudulent activities, 80% of which are carried out by employees.

For many individuals, perpetuating fraud against an employer is not perceived to be a crime, particularly when it comes to ‘petty’ theft – such as pilfering stationery, using the photocopier and minor fiddling on monthly expenses forms. There is no obvious victim and, frequently in those cases where large sums of money are involved, an individual believes the money is only being ‘borrowed’ to overcome a short-term problem, with full intentions of it being paid back at a later date.

Organisations have no chance of driving out this endemic fraud unless they put in place the processes and technologies that automatically highlight suspicious activity. Fraud detection techniques can achieve a real-time insight into both mistakes and misdemeanours that will not only save significant revenues, but also present a pretty substantial deterrent to potentially criminal behaviour.

Employers must shut the door on fraud before it is too late.

Richard Kusnierz, Director IDS

The Editor replies: Thank you for writing to us, Richard. If employee fraud has mushroomed into such a problem, surely it’s time companies were made to declare this in their accounts?

If, as you suggest, that were to focus the minds of senior management more clearly on this area, maybe then we could begin to cut back on what are now pretty substantial (and needless) losses?

Source

SMT