More robust fraud policies required from organisations

Workplace fraud is thriving in the UK despite close attention to expenditure and low levels of trust, according to the Chartered Management Institute.

In a new guide to help combat corruption - Workplace Fraud: The Enemy Within - it notes that half of organisations report being victims.

And it says that environments with few controls, unclear reporting structures and a 'blame culture' all create the opportunity for fraud to take place.

Of UK organisations polled, 30% said they need to improve cash flow management; most individuals believe their boss doesn't trust them; just 8% claim they have 'sign off' responsibility at work and; 35% believe that cost management is their biggest challenge.

Gillian Lees, risk and governance specialist at the Chartered Institute of Management Accountants (CIMA), said: "Organisations need to ensure that they have a robust fraud policy that is disseminated effectively.

"CIMA's forthcoming report on fraud risk management will provide further good practice and practical ways to help organisations promote awareness of fraud prevention, detection and response in the workplace."

Recommended best practice includes developing a fraud strategy statement, establishing an audit committee, making use of technology and developing a culture where fraud is unacceptable.

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Sarah Wallace from law firm Irwin Mitchell said:

"If companies discover they may have fallen victim to fraudulent activity by staff and/or external parties, it suddenly gives rise to an array of practical, legal and regulatory considerations." 

These include:

• launching an internal investigation possibly with the assistance of external lawyers
• forensic accountants and forensic technology experts
• preservation of company hard and e-documents and suspension of document destruction procedures
• reporting the matter to the police in relation to a possible criminal investigation
• dealing with asset tracing of the proceeds of crime by way of civil litigation
• possible reporting obligations under the Proceeds of Crime Act 2002 to SOCA
• possible reporting obligations to other regulators such as the FSA, consideration as to the effect on financial statements and accounts
• dealing with employment and disciplinary issues involving staff.