Business losses from employee corporate fraud double on last year to nearly £90m
Businesses lost nearly £90m from fraud carried out by their own employees this financial year, double the figure for the year before, new data reveals.
The Home Office defines corporate employee fraud as when an employee is able to obtain property or greater remuneration through the act of fraud, as well as the misuse of corporate cards and expenses.
Examples include expensing personal items as though they were business items, creating ghost employees on the payroll and wrongfully claiming unworked overtime.
A freedom of information request from audit, tax and consulting service RSM using data from Action Fraud found that business losses from fraud carried out by employees rose from £40m in 2016 to £88m in 2017/18.
The surge in losses could be due to more businesses reporting such crimes. Businesses submitted more than 1,418 reports to the police this year, a 76 per cent increase on the previous year. The average loss per report also increased by £12,000 over the past year.
RSM forensic partner Akhlaq Ahmed said the figures should come as a "wake-up call".
"It's not clear from these numbers whether incidences of employee fraud are increasing or whether more businesses are detecting and reporting their losses," he said. "However, the fact that we've seen reported losses double in a year should serve as a wake-up call to businesses that are overly complacent about fraud risk."
He said businesses should do more to encourage an environment where whistleblowers feel able to come forward without fear of reprisals.
"Ultimately, if employees feel confident enough to raise concerns, companies can help protect themselves from fraud losses and any resulting regulatory or legal action," he said.
Separate analysis by big four auditor KPMG found that the value of alleged fraud reaching UK courts in the first half of this year reached £895m – the highest figure recorded for any six-month period.
Read more: Banks told not to assume fraud victims are at fault