Forensic Accounting For Fraud
The authorities and commentators have long tried to estimate the impact of fraud in the UK. The Annual Fraud Indicator for 2023 published by Crowe in conjunction with Peters & Peters and Portsmouth University put UK annual losses to fraud at £219 billion. My work involves forensic accounting for fraud. This allows me to say that any estimate is likely to be on the low side!
Nobody knows the full extent of fraud
It is impossible to measure with any certainty how much fraud goes on. Forensic accounting for fraud provides an insight into how successful fraud will remain hidden, because it is the crime of subterfuge. What is certain is that it is always on the increase. There seems to be little effort to stop it.
Fraud Represents 40% of all UK Crime
Historically, the government did not report fraud. Now that it does, it immediately learns that 40% of all reported crimes are fraud related. However, they do not consider it to be a “serious crime” yet. Serious crimes include rapes, murder and organised crime, but apparently not the most prevalent problem of fraud.
Anybody who has been a victim of fraud will attest to the destructive influence it can have on lives. Victims commit suicide, pension savings are lost, lives are destroyed.
Government to Reduce Fraud by 10%
In response to the revelation that 40% of all crimes involve fraud, the government response seems weak. The UK Home Office estimates that fraud against individuals alone was £4.7 billion last year. However, the Crowe report estimates fraud directly against individuals to represent losses of £8.3 billion. The government is, as usual, woefully out of touch. Its response to fraud is to announce aims to cut it by 10% by 2024. Employing 400 new police officers dedicated to investigating fraud is the government’s solution. The assumption is that they can find and train these officers, but this would bring the number of specialist fraud officers in the UK to perhaps 2,000 at best.
A Positive Forensic Accounting Development
I have been specialising in fraud and financial crime for some thirty years but work for both the authorities and the fraudsters (well… for their lawyers at least!). Notwithstanding this, it is my independence is that gives my work value. However, as an experienced observer of fraud cases, it gives me satisfaction to see that my work is directed at achieving the proper outcome.
Therefore, a shift in the authorities’ willingness to employ external experts recently is pleasing. Whereas the police or CPS might instruct me once or twice a year with a new assignment, the frequency has now increased.
My research for my master’s degree in Fraud Investigation Management revealed that the hourly cost of my expert services forensic accounting for fraud was far less than the hourly cost of a police officer. This takes into account training, pension, administrative support and all other costs involved keeping a police force active.
My discussions with investigating police officers also reveal that they suffer when defendants are able to respond to fraud allegations with competent forensic accounting reports. They often do not have the budget to level the playing field and expertly define what are often complex financial situations.
So hopefully, police forces are beginning to plan ahead, to allocate some resources in their budgets to expert forensic accountants. My hope is that this will have a beneficial long-term effect, in terms of cost and efficiency of running cases.
The next problem to solve is the dreadfully inefficient criminal prosecution and court system!