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Threats to individuals from identity fraudsters and con-artists are well publicised, but the vulnerability of organisations to fraudulent activities is often overlooked. New figures, illustrating the scale of fraud across the UK, have been released by KPMG; in a challenging recessionary climate, the cost of fraud to businesses has reached record levels.

Whilst Government agencies have come off worst, the private sector is also increasingly becoming a target for fraudsters. The total cost of fraud across the country was 1.1bn, with 266m of losses accounted for by the private sector. That’s a year on year increase of more than 30%.

Vivienne Osborne is Forensic Director at KPMG’s Leeds office. She said that, in the first 6 months of 2010, 23 large fraud cases involving figures over 100,000 had been heard in Yorkshire courts. Examples included a Leeds-based teacher who was sent to prison after being found guilty of a 1.7m mortgage fraud, and a Bradford-based finance director who illegally channelled 1.3m from her employers. Osborne attributed the increase in fraud to the development of e-commerce and automated payment systems, as well as the increasing sophistication of professional criminals, who are responsible for the majority of cases.

She also pointed out that whilst larger organisations are just as likely to be victims of fraud, it is the small and medium-sized firms that tend to be hit hardest when fraud occurs, with “significant cash flow problems…redundancies…at worst a fight for survival” on the cards.

Internal fraud perpetrated by company employees has risen from 181m in the first half of 2010 to 225m over the same period this year. KPMG emphasised the importance of companies ensuring they have the necessary tools in place to prevent and detect fraudulent activity within their own ranks. This might include whistle-blowing lines, and, more generally, a thorough, ongoing analysis of any financial and accounting data through which instances of fraud might be revealed.

Accountants in Yorkshire can help ensure your business is safeguarded against fraud.