Explosion in fraud leads to call for culture change to support whistleblowers

Human resources (HR) experts have warned that companies must develop an anti-fraud culture in the workplace so that whistleblowers feel safe to come forward.

The warning follows the annual Global Economic Crime Survey by business consultancy PricewaterhouseCoopers, which revealed that the average cost to UK businesses affected by fraud had doubled to £1.75m in the past year.

The survey found a 21% increase in the implementation of whistleblowing systems, but half of the 5,400 respondents said they were effective, and only 3% of serious incidents were detected by such systems.

Research last month by accountancy firm BDO Stoy Hayward found that employee fraud costs UK businesses £4m a day, with the biggest scams including bogus invoices, manipulated accounts and ghost workers on the payroll.

Stuart Little, commercial litigation partner at Shoosmiths Solicitors, said recruitment and IT were the most vulnerable sectors.

Jon Ingham, director of HR consultancy Strategic Dynamics, said: “The right internal procedures and controls will help to manage the problem, but if people are going to engage in fraudulent activities, they will soon find other means of doing this once one activity is controlled. The key is to create a work culture in which whistleblowers are happy to come forward.”

The Chartered Institute of Personnel and Development added that it was important for employees to feel that confidentiality would be respected during whistleblowing procedures.

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