The cost of employee fraud has increased by 200% since 2003, according to the annual FraudTrack report from accountants BDO Stoy Hayward.
Andrew Durant, head of BDO Stoy Hayward’s fraud investigations team, said: “The Financial Services Authority has recently and rightly warned financial sector firms to be on their guard against criminal gangs that are increasingly targeting them.
“However, for most businesses in the UK the reality is that when they are the victim of fraud the perpetrator will be an ordinary and trusted employee who has developed a taste for exotic holidays, fast cars and a fast lifestyle.”
The overall value of reported fraud in the UK shot up by nearly 30% between 2004 and last year, to almost £1bn.
Nearly two-thirds (65%) of frauds where a motive was reported were a result of greed and the desire to lead a lavish lifestyle. A further 11% were linked to gambling and 10% were to pay existing debts.
The research shows that, when it comes to stopping fraudsters, businesses are failing to make use of their main ally – the honest majority of workers.
Nine in 10 of the 1,500 employees questioned said they would want to report dishonest colleagues, but many would be deterred by not knowing the correct procedure or through fear of recrimination.
The survey also shows that only one in 12 expect any sort of reward or recognition for alerting their management to suspicions of a fraud.
“Clearly, attitudes need to change,” said Durant. “Directors need to ensure their businesses move away from a culture where the whistleblower is seen as a ‘grass’.”