Recession ‘could increase fraud’

FINANCE directors in the North West have been urged to look out for signs of fraud because recession could make corporate criminal activity more likely.

James Treadwell, a partner at Moore and Smalley Chartered Accountants and Business Advisors, said tougher economic conditions are increasing the pressure on suppliers and employees, and could lead to more fraud.

He believes companies should make it a priority to put systems in place to prevent low-level fraudulent activity spiraling out of control.

He said: “Whether its managers trying to conceal bad results from internal and external observers, employees attempting to boost pay and income through illegal means, or staff providing false information to justify their position, fraud often increases during a recession.

“Prevention is definitely better than the cure, as what can start as minor misdemeanours can quickly become major abuses of position if they are allowed to go on unchecked and this can put a business at considerable risk.”

Figures from BDO Stoy Hayward’s FraudTrack report show the total reported fraud rose to £1.9bn in 2008 in the UK, up 14% from the £1.04bn in 2007. In the financial and insurance sector fraud increased by 83% to £788m – accounting for 66% of all fraud in the UK.