THE COST OF EMPLOYEE FRAUD

Released On 20th Jun 2023

Recent figures suggest that theft at work in England and Wales has increased by 19 per cent amid the rising cost of living. The research, which was based on police data gathered from a freedom of information request, found that almost 6,000 employees were caught stealing from their workplace in 2022, compared to 5,000 the previous year.

HR professionals believe that these thefts could be a symptom of the cost of living crisis and include stealing cash, office supplies, data, intellectual property or making fraudulent expense claims.

However, while some HR professionals believe that pilfering small amounts could be overlooked, considering the straitened circumstances many employees find themselves in, the research also shows that there has been an increase in the number of data thefts and embezzlement of company funds, involving much larger amounts. In fact, the research suggests that businesses affected by commercial crime face average losses of £140,000.

Unsurprisingly, the majority of business thefts occur in the areas of the UK most badly hit by the cost of living crisis, with the biggest increase in the number of commercial thefts being recorded in Lincolnshire, with incidents there rising by more than 40 per cent.

Whatever the size of theft, businesses need to be alert to the possibility of it, as many frauds are perpetrated by employees who business owners have no reason to suspect.

With the new criminal offence of failing to prevent fraud, organisations need to ensure that they have the appropriate internal controls in place to try and prevent fraudulent behaviour by employees.  A good way to ensure the suitability of such controls is to engage a firm of forensic accountants.

The criminal offence will only apply to large businesses, to avoid disproportionate burdens on SMEs and promote economic growth.

These experienced experts can advise on best practice and how to implement procedures that will ensure the risk of fraud is minimised. They can show examples of good governance and identify existing weaknesses in the business’s system.

As Helen Gregory, Forensic Director at Milsted Langdon explains: “Business owners must be aware of the concerning rise of theft occurring in the workplace”.

“However, it is crucial to approach this issue with understanding and compassion, depending on the manner of the theft”.

“The cost of living crisis has placed immense financial strain on employees, potentially driving some to resort to desperate measures”.

“It is particularly important for businesses to put infrastructure and security measures into place to prevent data thefts, otherwise they could risk criminal convictions along with loss of confidential client information and company funds”.

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