KPMG: culture and tone critical to stamping out internal fraud

Pre-occupied with battling the on-going downturn, UK businesses* now also find themselves fighting more fraud than ever before – KPMG reveals today.

Some highlights (focussing on internal threats and awareness raising):

The UK (albeit public or private sector) is now fighting multiple enemies. The majority of fraud is committed by professional criminals. with fraud perpetrated by criminal gangs rising 107% in the first half of 2011.

Internal fraud committed by employees (of all levels of seniority) also did £225 million worth of damage this year (up from £181 million in January-June 2010), with management fraud averaging out at £7.3 million per case and employee fraud around £708,000.

“Operating in positions of trust and authority, helping them conceal their tracks with greater ease – the more senior the employee the more damage they can inflict when acting fraudulently,” suggested Patel (UK forensic partner, KPMG).

“The culture and tone at the top are critical to stamping out internal fraud,” urged Patel. “In order to guard against professional criminals, and those operating outside the business, companies must fully assess where in their operations they are vulnerable.”

He continued: “They should arm themselves with a set of controls that enable greater detection, such as whistleblowing lines and fraud risk reviews, while thoroughly mining the wealth of data that sits within their own organisation which, if analysed, would identify fraudulent activity.”

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Panel's Jotter

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