Fraud against public sector soars worldwide

6 Mar 12
Public sector fraud is on the increase globally, with organisations particularly at risk from their own employees and suppliers, according to research published today by PricewaterhouseCoopers

By Nick Mann | 13 January 2012

Public sector fraud is on the increase globally, with organisations particularly at risk from their own employees and suppliers, according to research published today by PricewaterhouseCoopers.

The firm’s Global Economic Crime Survey found that 46% of the 184 public sector respondents had experienced one or more incidents of economic crime in the past 12 months, compared with 37% when the survey was last carried out in 2009. This was also well above the 34% average across all sectors involved in the survey.

UK organisations accounted for 27 of the public sector respondents to the survey - the most from any country involved. There were also 19 respondents from New Zealand, 16 from Australia and 15 from Kenya.

Fraud by employees accounted for 67% of cases, compared with 57% in 2009. PwC said that public sector employers were still less likely to dismiss employees for fraud than other employers.

Ian Elliott, a partner in forensic sciences at PwC, said: ‘It can be all too easy for an individual to simply transfer departments, leaving them free to commit their crimes over and over again.

‘If public sector organisations are to adopt a zero tolerance approach to economic crime, they need to consider seriously the actions taken against fraudulent behaviour.’

Other types of fraud against the public sector also rose across the world. Supplier fraud accounted for 32% of all frauds committed by external parties, compared with 13% in 2009. Cyber crime, previously at insignificant levels, affected 14% of public sector respondents last year.

According to PwC, ‘almost all’ types of fraud were rising. Asset misappropriation was the most common type of fraud, with 75% respondents saying they had experienced this.

Accounting fraud was reported by 32% of respondents – up from 28% in the previous survey. PwC noted that type of crime is falling in other sectors.

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