Posts tagged ‘Internal Fraud’

During an economic downturn both individuals and organisations can suffer from adverse pressure, increasing the motivation for fraudulent behaviour.

Organisations are at risk from fraud both internally from employees and shareholders, and externally from suppliers, contractors and other organisations.

According to KPMG  (data: July 2009) more than 160 cases of serious fraud, worth in aggregate £636million came to UK courts in the first half of 2009, the highest number of cases in the 21 year history of the KMPG Fraud Barometer.

stationary thief

Research from BDO Stoy Hayward suggests fraud cost UK companies nearly £2.1bn last year, an increase of 76% from the previous year. 

Fraud has many guises such as ineligible claimants of state benefit, money laundering and unauthorised sharing of databases or intellectual property.

Fraudulent expenses claims are more common that you might imagine and whilst it may seem petty, the occasional raid of the stationery cupboard is still theft of the employers assets.

Internal Fraud: Warning signs might include

  • Staff who have personal financial problems or have lifestyles not commensurate with their remuneration
  • Employees who regularly arrive early or work late or appear to be under stress without a heavy workload
  • Staff under pressure from unrealistic targets set by management or heavy emphasis on performance related pay.
  • Internal and/or external complaints about certain people/teams
  • Unwillingness to delegate and/or reluctance to take holidays
  • Over-friendly relationships with external stakeholders
  • New staff resigning quickly as they are uncomfortable with ‘unusual behaviour’ but do not wish to report it

External Fraud: Warning signs might include

  • Insistance on dealing with one individual
  • Cash only or high volume, low value transactions
  • Unusual/sporadic payment behaviour
  • Increased prices without explanation
  • High staff turnover and/or lack of management control

Obviously,  these are only indicators and you should not accuse anyone just because their behaviours fit one of these points!

In a future post I will provide ideas on how to reduce the risk of fraud to your organisation.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.