The total value of frauds heard in the UK Crown Court soared to £717m in 2002 compared to £244m in the previous year, according to KPMG’s Fraud Barometer published this week. The firm said the hike in fraud values resulted in managers exploiting loopholes for their own gain.
The government was hardest hit as it was fraud victim in 22 cases with a combined value of £318m, nearly half of the total national fraud value.
‘The huge increases in both the total and average size of fraud cases are extremely worrying, as they demonstrate that companies are failing to take the issue of fraud prevention seriously. Companies need to do more to protect themselves,’ said David Alexander, fraud investigation partner at KPMG.
Alexander expects the ‘fraud increase to continue’ this year as the courts start hearing cases discovered in 2002, which may have been prompted by pressure of the worsening economic climate. In addition, he said, post-Enron non-executive directors are more alert and ready to take action with independent investigation.
Global fraud is also on the rise, reported Ernst & Young on Monday in its international fraud survey. More than half of its respondents said they had experienced a significant fraud in the last year, with half of those in excess of $100,000 (£61,000).
E&Y’s annual survey found that more than half of fraudsters were managers, which is a significant increase from last year’s survey according to John Smart, forensic fraud partner at E&Y. Some 85% of managers committing fraud were in their post for less than one year.
‘Frauds tend to increase during an economic downturn so companies across the globe should watch out for their surviving top management – especially those new to management pose a particular threat,’ Smart said.
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