The Annual Fraud Indicator 2016 found that businesses in the private sector are losing billions a year through fraud, with £12bn being lost through payroll fraud and even more being lost through procurement fraud.
The report was conducted by the UK Fraud Costs Measurement Committee in conjunction with Experian, PKF Littlejohn and the University of Portsmouth’s Centre for Counter Fraud Studies. The report found that the annual total cost of fraud in the United Kingdom is as high as £193bn per year. Payroll fraud was found to be responsible for just below 10% of all losses in private businesses, but the largest source of loss was related to procurement.
Human resource departments play a pivotal role in combating fraud. It is a human resource department’s duty to educate employees on acceptable behaviour and spot potential scams. If this department isn’t the first line of defence, human resource experts feel nobody else will step up to the plate.
Businesses generally split fraud into two camps, low-level fraud and high-level fraud. Low-level fraud has minimal affect on a business. This could be an employee adding a few extra miles onto an expense report. High-level fraud occurs on a much larger scale and has more intense affects on the overall business.
Of course every business is susceptible to fraud. Payroll fraud is a regular occurrence in businesses with employees trying to trick the time clock to get paid more for less hours worked.
HR experts suggest implementing some kind of audit system for employees and for the systems they use. It’s important for a business owner, or person in charge, to understand who is responsible for what within a business. Audits should look for things that are out of place like duplicate bank transfers, or duplicate employee numbers.
When it comes to procurement audits, management should look at all costs listed on an invoice and make sure to keep track of any completed work. In this line of fraud, scammers are banking on employees not keeping track of work that’s been completed, work that’s been paid for or work that just never existed.
HR professionals suggest the strongest way to avoid being a victim of fraud is to make sure procedures are in place.
