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Fraud at highest point in five years

Member: Nifa

Recent research has found that there was a 32 per cent increase in the total value of reported fraud and a 35 per cent increase in the average value of reported fraud in 2016. However, the report comes with the caveat that reported fraud is the tip of the iceberg, with many firms preferring to investigate suspected cases of fraud behind closed doors to avoid reputational damage.

The total value of reported fraud over the value of £50,000 came to £1.5bn in 2016, even though the number of such cases fell from 546 in 2015 to 519 last year. However, the average value of fraud rose to £2.9m, with the largest cases reaching £250m.

There were regional variations too. While London and the South East remained at the top of the list for reported fraud, at £600m, the highest increases regionally were in the Midlands, the North East and Yorkshire.

According to the report, two of the biggest frauds in the non-corporate area were both Ponzi schemes, while the largest of all non-corporate frauds was a £130m foreign exchange case in Yorkshire.

However, on the corporate front, as one of the report’s authors pointed out, high-value, complex fraud is increasingly being dealt with “behind closed doors”. Firms prefer to keep the judicial system out of the loop to avoid reputational damage to their businesses.

If fraud is suspected, business owners should engage forensic accountants to investigate whether there is a basis to their suspicions. Using sophisticated software and years of experience in such cases, these experts will trawl through documents such as accounts documentation, emails and letters to establish the facts of what has happened. Then, if the firm decides to take the matter to court, the accountants can report to the court as expert witnesses.

Author: Roger Isaacs, 10 March 2017

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