The true cost of employee fraud
Last week People Management reported that UK businesses have faced losses in excess of £40m from employee fraud last year, following the publishing of data obtained by accountancy firm RSM through freedom of information requests.
Employee fraud can include falsifying travel and subsistence claims, creating fake customer records or simply stealing. Despite the data highlighting that employers reported more than 800 instances of fraud from within their organisation between 2016 and 2017, a shockingly large number of employee fraud is believed to go unnoticed. Such conclusions led RSM forensic partner, Akhlaq Ahmed, to ominously warn that this could be just the “tip of the iceberg”.
This recent data disclosure bought to the fore the true cost of employee fraud, with Mr Ahmed particularly urging organisations to rethink their whistleblowing policies.
He continued: “unfortunately, we have seen examples recently in which poorly managed whistleblowing incidents have been ignored or where whistleblowers have been exposed or criticised. Embedding an effective whistleblowing culture is heavily reliant on the right tone being set from the top. Ultimately, if employees feel confident enough to raise concerns, companies can help protect themselves from fraud losses and conflicts of interest in addition to any resulting regulatory or legal action.”
Research conducted by not-for-profit organisation Credit Industry Fraud Avoidance System, revealed that currently almost half (47 per cent) of insider frauds were uncovered by internal controls and auditing, while a fifth (17 per cent) were thwarted by line managers or whistleblowing.
It is therefore vital that whistleblowing policies are reviewed to ensure the best chance of catching fraudsters.
Meanwhile, Emma Ahmed, professional support lawyer in the employment team at Hill Dickinson, warned: “The most serious and damaging employee frauds are often committed by longstanding senior employees who abuse their position of trust in the business and treat the company’s cash as their own. Such frauds are often extensive and can run into hundreds of thousands of pounds.”
As such, perhaps it is necessary to instigate greater degrees of scrutiny and auditing due diligence at each tier of the organisational structure, but do we then face an even greater ethical dilemma?
Originally published at: http://www2.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2017/09/18/employee-fraud-cost-uk-businesses-163-40m-last-year.aspx#