UK Fraud above £2bn for 2011
Fraud in the UK topped £2bn last year according to research by BDO, which warns that companies need to be more proactive with fraud prevention.
The firm’s 2011 FraudTrack report registered a total of £2.1bn, a 50% increase on the previous year’s figure of £1.4bn and the highest ever recorded for BDO’s annual survey, which collates data from all reported fraud cases over £50,000.
The number and average value of reported cases has also increased sharply. In 2011 there were 413 reported cases, at an average value of £5m, compared with 372 cases in 2010, at an average value of £3.7m.
Looking at individual sectors, the survey suggests finance and insurance sector fraud has halved, accounting for 27% of all frauds compared to 56% in 2010, the lowest percentage in the last five years.
However, fraud in the retail sector has increased markedly, accounting for 12% of 2011 cases compared with 2% previously. Construction accounts for just 1% of all reported fraud in 2011, compared with 34% last year, which BDO says is a sign that the sector is failing to take the issue seriously.
Tax fraud accounts for the highest percentage of fraud committed, at just over 36% and with an average cost of £13m. BDO says VAT fraud, such as carousel fraud, is the most common. Second on the list is fraud committed by suppliers and customers (30%) with an average cost of 7.7m.
Employee fraud is down to 10% from 14% last year, and the average per fraud is £1.4m. Management fraud is also steadily declining, with this year’s figure of 5.5% the lowest in four years and considerably below the 31% recorded in 2008. BDO reports that cases of corruption are on the rise, up from less than 1% in 2009 to reach 4% in 2011.
Simon Bevan, head of fraud at BDO, said: ‘Organisations need to be much more proactive when it comes to preventing fraud. Too often risk teams are either too externally focused or fail to look at fraud from a financial point of view. If companies continue to take a reactive approach to preventing fraud, I’m in no doubt that these figures will continue to rise year on year. You cannot design all fraud risk out of a business but you can put trip wires in place.’
- Five-a-side Football Company Discovers Accounting Errors after a Business Review
- British Regulator Fines UBS £27.6m for Reporting Failures
- Big Four Supports Mandatory Reporting of Ethnicity Pay Gap
- Victims of Investment Scams Lost Average of £29,000
- Paul May Resigns as CEO of Café Chain Patisserie Valerie
- South Korean Financial Regulator Accused Samsung BioLogics of Accounting Violations
- ACCA Publishes Report on Emotional Intelligence Important for Accountants to Survive in the Modern Workplace