A study by accountants BDO Stoy Hayward has found that business fraud is up by over 70 per cent compared with last year and they estimate the cost of business fraud is now more than £700 million a year.
Management fraud accounts for nearly half of the total, according to the report. The finance and insurance sectors seem to be the worst hit, with more than 90 per cent of the reported total affecting those sectors. This may, however, just be an indication that these sectors have comparatively well developed internal controls, so are more likely than businesses operating in other sectors to detect fraud.
Recently, ‘Big 4’ accountants KPMG reported that in the first six months of 2008, 128 cases of fraud came to court, involving more than £630 million, an increase of nearly 50 per cent on the previous six months and an amount which was more than the total for any year in the 20 years the firm has been keeping statistics. Over half of the fraud they reported was against the financial sector.
With the impact of the credit crunch and the record level of financial fraud being uncovered, it is unsurprising that the banks are being even more careful in their lending decisions.