The rate of fraud growth in Britain has nearly doubled in the past six months, according to the latest six monthly update to BDO Stoy Hayward’s annual fraud report.

The update reveals that reported fraud during the whole of 2008 cost Britain 1.2 billion GBP, but just six months into 2009, the cost of reported fraud has already reached 960 million GBP. Further, the total number of fraud cases has jumped by a third.

Simon Bevan, head of the fraud services team at BDO Stoy Hayward, said, “From a fraud point of view we are a long way from bottom. It is extremely likely that the total fraud figures will treble during the course of the recession”.

The report identifies a serious problem of internal fraud threatening the survival of corporate and public sector entities. As management level employees face pay freezes, bonus withdrawals and redundancy threats, some are straying off the path to keep their jobs and salaries in tact.

The report found that fraud committed by management makes up 29% of reported cases of fraud, costing the country 339 million GBP in 2007 and 358 million GBP in 2008. A common deception among managers is the falsifying of company performance data to make pay rises seem justified and redundancies unnecessary. Companies with several offices were found to be particularly vulnerable to this threat as perpetrators are able to control exactly what information is reported back to head office.

In addition, the report reveals that 8% of fraud in 2008 was committed by employees, costing the country 22 million GBP in 2007 and 95 million GBP in 2008. The report highlights proper vetting as vital in the fight against staff fraud. Deception often begins with a curriculum vitae containing exaggerations or indeed total fabrications. As unemployment levels rise, the motivation to lie to secure a job rises, so background checks have become all the more vital as a defence against fraud.

As most cases of workplace fraud will involve the use of a computer, reporting procedures should be regularly audited and staff should be trained in how to deal with a computer that may contain evidence of fraudulent activity. In many cases, this will involve engaging the services of a computer forensic expert, as the analysis of computer evidence by IT personnel can render any evidence recovered inadmissible in a court of law or employment tribunal.

Highlighting the need for adequate detection measures, Mr. Bevan stressed that the honesty and vigilance of others should not be relied upon.

“Unhelpfully, I predict that whistle blowing may fall during a recession due to employees wanting to keep their jobs in a precarious employment situation. Redundancies are now common and many people are just thankful to have a job,” he said. “Why would they want to cause trouble by whistle blowing? More likely, they will put their heads down and close their eyes and ears.”