Level of fraud in Irish business has halved, says study

THE LEVEL of fraud in Irish business appears to have halved over the last year as managements and staff boosted detection procedures in a bid to stave off losses from dishonest behaviour, according to a survey due to be published today.

The Ernst Young European Fraud Survey shows that 16 per cent of the Irish businesses that took part in the study encountered some kind of corporate fraud over the last year, as opposed to 32 per cent in 2010.

The study says that Irish businesses have been amongst the most proactive in Europe in terms of increasing fraud detection within their organisations over the last 12 months.

An estimated 37 per cent of them increased fraud detection in the last year, just behind Turkey, where 42 per cent took preventative measures, and Hungary, where 38 per cent did so. The Irish were ahead of the European average which was 29 per cent.

The survey also shows that 60 per cent had some form of anti-fraud training during the past year, contrary to a trend in Europe where complacency about the problem and cutbacks run the risk of aggravating the problem.

However, today’s findings also confirm that gaps remain in Irish business that continue to limit the effectiveness of anti-corporate fraud policies.

Despite the growth in anti-fraud strategies a significant number of business people believe that some degree of unethical behaviour is allowed if it helps them achieve growth.

Over a quarter of all senior managers and over a third of employees say that activities such as offering personal gifts, free entertainment and even cash payments are acceptable in order to win new business or retain existing customers.

This is consistent with the rest of Europe, where more than a third of employees of large companies polled are prepared to offer cash, gifts or entertainment to win business.

Commenting on the results, Julie Fenton, fraud investigation and disputes partner with Ernst Young, says it is clear that despite more widespread use of anti-fraud policies, business leaders still have work to do when it comes to articulating how such strategies should work in day-to-day business.

“This includes clearly communicating what is acceptable and what is not, the consequences for employees who do not adhere to these rules and regulations, and following through on disciplinary procedures when breaches occur.”