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Business Fraud A Growing Problem During Recession For Small And Medium Businesses
04/11/2009
By Lea Pachta
Small and medium businesses fear that they might be more at risk due to financial crisis.
An increase in fraud and other forms of financial crime is one of the unfortunate consequences of the current unstable financial environment across Europe, says ACCA's (the Association of Chartered Certified Accountants) head of business law, John Davies.
Citing recent figures from KPMG's Fraud Barometer, John Davies says there has been an increase in fraud cases - in the first half of 2009 over 160 cases of serious fraud, involving a total of £636 million, were brought before the UK courts: the highest 6-monthly figure in the 21 year history of the KPMG barometer.
John Davies says: "It is a matter of concern that many businesses do not seem to be taking reasonable steps to defend themselves against fraud. According to BDO Stoy Hayward's research, less than a third of UK businesses have a fraud training programme and 40% do not have any fraud prevention measures in place. The recession may be prompting businesses to cut costs by scaling down or dismantling the internal controls which act as a check on fraud - this could turn out to be dangerously counter-productive."
Small and medium businesses will not be in a position to operate internal controls on the scale of larger companies. But any business, regardless of size, is potentially at risk and should take reasonable precautions to avoid falling victim.
Mr Davies advises businesses to look out for the following possible warning signs in the behaviour of their staff:
o Increased levels of stress
o Lifestyle not commensurate with salary
o Personal financial problems
o Reluctance to take annual leave
o Unwillingness to delegate
o Cosy relationship with contractors and suppliers
Companies should also watch out for possible financial indicators of fraud, such as:
- A rise in cash... continued on page two >
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