UK counts £52bn cost of fraud
Fraud is costing the UK economy billions of pounds a year, new research has found – which means accountants are becoming increasingly vigilant about the issue.
The Annual Fraud Indicator, compiled by the National Fraud Authority (NFA) and published on 6th June, put the annual cost at £52 billion.
Private businesses were estimated to have suffered total fraud losses of £15.9 billion while the public sector faced a £20.6 billion fraud bill. The cost to individuals was put at £9.1 billion, while charities were estimated to have suffered losses of £147 million. Fraud affecting financial and insurance activities was put at £5.4 billion.
Stephen Harrison, chief executive of the NFA, said: “Individuals can experience financial loss, which can also have a significant emotional cost, especially for vulnerable victims.
“Private sector businesses suffer the highest levels of loss and can also suffer other impacts like reputational damage. Loss to smaller businesses can even put their future at risk. “
Types of fraud included insider-enabled fraud, identity fraud, cyber-enabled fraud and organised crime.
The accountancy sector has to stay ahead of these issues in order to protect bona fide businesses.
The report illustrated the potential impact of fraud by citing the case of one company that had in the last two years become the victim of a number of incidents of business identity fraud, with goods being ordered in the company name by an unknown person or persons. In accountancy terms, this was a real problem.
The company first became aware of the issue when it received invoices from European and UK suppliers for goods it had neither ordered nor received.
The invoices were contested, but the fraud resulted in costs of around £50,000 in legal fees for representation in court and fighting cases against the company for non-payment along with “an unquantifiable level of damage to the company’s reputation, as a result of being blacklisted in some countries for alleged non-payment of bills, as well as directors’ time spent addressing the issue.”
As leading accountants, well-versed in identifying these ‘dark’ practices, you can rely on us to identify ruses that could potentially harm your company.