Six in every 10 small Irish firms have fallen victim to fraud in the past three years, costing the sector more than €100 million a year, a new survey from the Small Firms Association (SFA) claims.

The survey blames a lack of measures taken by companies to prevent such losses.

"Fraud is a major problem but far too few businesses recognise the problem exists, and then only when it is too late," said Mr Pat Delaney, director of the SFA, a part of employers' lobby IBEC.

The association found that more than 80 per cent of fraud cases are internal and are facilitated by a lack of proactive fraud prevention by managers. Ninety per cent of the companies surveyed had no such measures in place.

The average loss to companies who fall victim to such crime is €4,000 according to the SFA, with more than 10 per cent of firms surveyed reporting losses in excess of €12,000.

Three-quarters of all such incidents are committed by employees, with managers responsible for a further 7 per cent, the survey found.

"Cash handling, lodgments, raw materials, fixtures, finished product, false invoices and delivery notes and false expense claims are all areas where business should be most vigilant," he said.

Mr Delaney said that external auditors were successful in catching just one in 10 such incidents with a further two in 10 uncovered by accident, mostly by employees.

"Small businesses tend to be reactive rather than proactive in dealing with fraud," said Mr Delaney.

"This lack of action in the face of the evidence is most worrying given that internal fraud may be costing small business in excess of €100 million a year."

He said that 20 per cent of companies who find themselves in the situation conceal the fact and make no effort to bring the culprits to justice.