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Austerity "triggers economic crime wave"

The good news is Britain has at least one growth industry. The bad news is it's economic crime.

According to a new global study by accountant PricewaterhouseCoopers (PwC), 51 per cent of UK firms have been affected by fraud in the last 12 months, compared with a worldwide average of 34 per cent.

PwC noted that 84 per cent of these businesses had carried out a fraud risk assessment in the past year, suggesting the increase in crime is partly down to improved detection.

However, this could prove cold comfort to companies that have seen both the volume and cost of economic crime rise since 2010. Compared with 2009, the proportion of UK firms reporting the cost of fraud at between $100,000 and $5 million has climbed by 11 per cent, while the proportion putting the cost at $5 million or more has increased by three per cent.

The majority of respondents said that external sources were responsible for fraud committed against their company, but over a third reported their own employees had carried out large-scale financial wrongdoing.

The typical internal fraudster was male, aged between 31 and 40, educated to below degree level and had been with their employer for three to five years. The global profile was much the same, although foreign fraudsters are better educated, holding on average at least a first degree.

Overall, misappropriation of assets was the most common form of economic crime, affecting 69 per cent of UK companies that reported a fraud in the past 12 months. Another 35 per cent were victims of accounting fraud.

However, PwC said, these "conventional" methods appear to be on the wane, while new forms of economic crime are growing rapidly. Since 2009, for example, cybercrime has shot from accounting for zero to 26 per cent of cases - making it the third biggest type of fraud.

PwC forensics partner Tony Parton said, "This is a dramatic finding and marks the promotion of cybercrime to the premier league of fraud. As well as direct financial costs, there are other commercial consequences of cybercrime, such as reputational/brand damage, poor employee morale or service disruption."

By Andy Jowett

Austerity "triggers economic crime wave"
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