Threats to individuals from identity fraudsters and con-artists are well publicised, but the vulnerability of organisations to fraudulent activities is often overlooked. New figures, illustrating the scale of fraud across the UK, have been released by KPMG; in a challenging recessionary climate, the cost of fraud to businesses has reached record levels.

Although Government agencies have borne the heaviest burden, the private sector is also being increasingly targeted by fraudsters. The private sector suffered 266m of losses out of a national total of 1.1bn. Year-on-year, this represents an increase of more than 30%.

23 large fraud cases involving figures over 100,000 were heard in Yorkshire courts in the first 6 months of 2010, according to Vivienne Osborne (Forensic Director at KPMG’s Leeds office). In one case, a teacher from Leeds was jailed for perpetrating 1.7m mortgage fraud. In another, a finance director from Bradford was sent to prison for illegally pocketing 1.3m from her employers. The development of e-commerce and automated payment systems, as well as the growing sophistication of professional criminals, who are responsible for the majority of fraudulent activity, have been blamed for the increase.

Although fraudsters target organisations of all sizes, it is small to medium-sized businesses that are least well-positioned to the absorb the impact of such activity. For SMEs, fraud can propagate “significant cash flow problems…redundancies…at worst a fight for survival.”

Internal fraud committed by employees cost the private sector 181m in the first half of 2010. For the same period this year, the figure was 225m. KPMG underlined the importance of businesses making sure they have the necessary mechanisms in place to impede and pinpoint fraudulent activity within their own ranks. Suitable measures could include whistle-blowing lines, as well as a vigilant approach to monitoring financial accounts data for any inconsistencies that might indicate fraud has taken place.

Contact these Yorkshire accountants to discuss how your business can guard itself against losses.