Back office cuts and pay freezes will leave employers more exposed to fraudsters as the UK moves out of recession, experts warned today.
A report from professional services firm PricewaterhouseCoopers (PwC) says that pay freezes and reduced career mobility have made many workers anxious about maintaining their living standards and their career prospects.
It suggests that the rationalisation of administrative functions means more work is signed off with less scrutiny.
In addition, internal audit activities have been pared back, which can lead to new windows of opportunity for fraudsters, the report warns.
Tony Parton, PwC partner and forensic accountant, said: “We are living through a period of pay freezes and slow economic growth and the recovery may be a long slog. For some, the desire to maintain their living standards can drive them to cross the line into committing fraud.
“Even as the UK comes out of recession the motivators for fraud will persist. Pay rises and rewards will not kick in for a year or more after any significant economic recovery, so workers’ experiences are unlikely to match news of improvements in share prices or trading conditions.
“Reduced investment in compliance and checking processes makes it easier for fraudsters, both inside and outside organisations, to exploit weaknesses and opportunities. The result for the company can be reputational damage and stiff fines.”
Nearly half (46%) of UK public sector respondents to PwC’s recent Global Economic Crime Survey reported an increase in incidents of economic crime in the past year. Public sector organisations will be particularly vulnerable to fraud this year as the full impact of the downturn shifts from the private to the public sector.