How much could internal fraud be costing your business?
Insider fraud is a little bit like a noxious gas leak –hard to trace, but an absolute menace when not tackled. The tough economic climate, in addition to many businesses having inadequate controls in place, has led to fraud being increasingly common in the UK according to figures from the Credit Industry Fraud Avoidance System (CIFAS). According to CIFAS’ research, there was an 18% rise in the total number of staff frauds recorded in 2013 compared with 2012.
In fact wider fraud is thought to have cost the UK economy anywhere between £52billion and £85 billion in 2013 – the fact this figure is imprecise demonstrates a worrying lack of clarity about the extent of the problem.
CIFAS say the theft of cash from either a customer, or submitting false invoices in an attempt to manipulate accounting practices, are some of the most common types of internal fraud. Such frauds constituted 40% of all insider frauds in 2013.
The continued rise of internal fraud underlines why organisations must have robust back-office systems in place to prevent and detect suspicious activities. Electronic document management software is one technology which makes it hard for staff to conveniently ‘lose’ or tamper with financial documents, such as invoices, purchase orders and delivery notes. Integrated document management solutions provide businesses with peace of mind by maintaining a complete audit trail of a document’s lifecycle which makes it easy to see who has accessed it and when, while making it impossible for documents to go missing or be tampered with in any way.
The threat of fraud could be more heightened from within an organisation compared to outside due to staff having an intimate knowledge of systems and processes, particularly when these processes are dominated by paper. Internal fraud may occur less frequently, but has the potential to be huge, Barings Bank being a point in case. it is the insider who can wreak far more damage and breach the trust of an organisation unless robust controls are in place. Can you afford not to have these types of controls in place?
Unscrupulous employees may well be put off if they believe a business’s back-office systems have strong financial safeguards, and certainly document management with its digital footprint accessible by those outside the finance team is a powerful tool to prevent fraud..
For those intent on committing fraud, the chances are they will view it much the same way a burglar eyes up a potential target: intruders tend to avoid homes where security is good. Likewise, fraudsters will tend to avoid businesses where systems like document management are deployed and look for easier pickings elsewhere.How much could internal fraud be costing your business? by Janette Martin