Public sector financial crime is on the increase and, according to a new report from PwC, this is more likely to be an inside job than the work of an external criminal.
Over the past 12 months, 60% of all public sector organisations have experienced some kind of fraud. Internal fraudsters account for 53% of detected financial crime. This is quite a large jump from the 39% recorded in 2009.
For the first time, accounting fraud has overtaken asset misappropriation at the top of the public sector economic crime table. Included in this bracket are cases of accounting manipulations, unauthorised transactions and fraudulent credit applications.
Ian Elliott, a PwC partner, said scams and frauds that have been on the go for years may now be coming to light as organisations pay more attention to expenditure. Employee engagement and loyalty could also be tested in the wake of pay freezes and redundancy announcements.
74% of the survey respondents said the government spending review has increased the danger of financial crime. Employees and contractors facing redundancy may look to fraudulent methods to increase their benefits and the cutbacks have led to changes in accounting responsibilities.
There are now more opportunities for fraud as mid-office functions disappear and the responsibility for auditing is spread more thinly. Regular risk assessments need to be carried out in order to identify possible frauds.
Public bodies can use new techniques, like continuous transaction monitoring, to identify anomalies and uncover things like false suppliers, duplicate remittances and unauthorised transactions.
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Image: Hail to the Thief by ▲Bonard▼
