Cut in back-office services carry fraud dangers

Cuts in back-office services will leave businesses and public sector bodies more exposed to fraud as the country moves out of recession.

Redundancies and the paring back of internal audit activities mean more administrative work is signed off with less scrutiny, says accountants PricewaterhouseCoopers.

In addition, pay freezes may lead to employees committing offences in a drive to maintain living standards.

PwC forensic partner Tony Parton said: “Pay rises and rewards will not kick in for a year or more after any significant economic recovery, so workers’ experiences are unlikely to match news of improvements in share prices or trading conditions.

“Reduced investment in compliance and checking processes makes it easier for fraudsters, both inside and outside organisations, to exploit weaknesses and opportunities.

“The result for the company can be reputational damage and stiff fines.”