The cost of employee fraud has nearly doubled in the past two years, despite a decrease in overall levels of fraudulent activity, according to new research.
Accountancy firm BDO Stoy Hayward's annual FraudTrack research covers all reported fraud cases in the UK worth more than £50,000.
In the first 10 months of 2005, 182 frauds worth a total of £399m were identified, compared to 164 worth £642m in the whole of 2004.
But since 2003, the value of employee fraud has increased by 81%, from £43m to £78m in 2005. This represents 20% of the total reported fraud in 2005 compared to 12% in 2004 and 13% in 2003.
Fraud investigator Andrew Durant, a partner with BDO Stoy Hayward said: "I am disappointed to see another rise this year. Companies clearly need to do more to reduce this serious threat to their business. Failing to do so could lead to their demise."
BDO Stoy Hayward recommends a three-step plan to address staff fraud:
- Deal with potential bad apples through adequate recruitment screening.
- Implement policies and procedures to ensure employees know what is right and what is wrong, and that wrong behaviour will not be tolerated.
- Ensure that when honest employees spot something that they feel is not right, they know whom to report it to and are assured they will be seen as corporate heroes, rather than villains.