Business News

February 2011

Forensic accountants help combat a rise in fraud

Fraud costs small and medium-sized enterprises an average of £2,800 a year each, according to new statistics from the National Fraud Authority (NFA).

 

The NFA released its second Annual Fraud Indicator on 27 January, which estimates the total yearly cost of fraud to the UK at £38 billion, highlighting the importance of ensuring that robust accounting systems are in place.

 

The public sector bore the brunt of the losses, estimated at £21 billion, with the private sector losing a further £12 billion.

Milsted Langdon's head of forensic services, Roger Isaacs said: "With an ever-increasing risk of fraud it is important to ensure that accounting systems are robust and fit for purpose and that, if fraud is detected criminal or civil prosecutions are supported by robust accounting evidence."

The NFA also worked with the Federation of Small Businesses (FSB) to produce a figure for how fraud affects small businesses.  They put the figure at £780 million lost by SMEs, adding up to around £2,800 per business, per year.

FSB policy chairman Mike Cherry says: “These costs can hamper enterprise for small firms when in fact the Government are looking to them for economic growth and job creation.”

He urged small businesses to report fraud to Action Fraud, the national fraud reporting centre run by the NFA.

Private sector areas seriously affected by fraud include the financial services industry, which lost £3.6 billion to fraudsters, mortgage fraud (£1 billion), insurance fraud (£2.1 billion) and online banking (£60 million). Charities lost a further £1.3 billion.

LINK: NFA press release

Roger Isaacs Partner email: risaacs@milsted-langdon.co.uk