The World Is Losing Over £2.7 Trillion ($4.23 Trillion) to Fraud and Mistakes Every Year

LONDON, February 10, 2015 /PRNewswire/ --

Businesses and other organisations around the world are losing an estimated £2.7 trillion ($4.23 trillion) to fraud and mistakes every year, according to new research from accountancy firm, PKF Littlejohn and the Centre for Counter Fraud Studies at the University of Portsmouth.  

The report, "The Financial Cost of Fraud 2015", based on global research over 17 years, also reveals that losses increased in 2012-2013 compared to 2010-2011, up from 5.01 per cent of annual expenditure to 5.9 per cent - an increase of 17.8 per cent, and 29 per cent higher than for the period prior to the recession from 1997 to 2007. This unexpected increase bucks the typical cycle of fraud after a recession, indicating that new social factors such as reduced adherence to collective ethical and moral norms, may be at play.

"The Financial Cost of Fraud 2015" report, which is available at http://www.pkf-littlejohn.com/the-financial-cost-of-fraud-2015.php , reviewed 382 statistically valid loss measurement exercisescovering over £9.76 trillion ($14.7 trillion, €13.02 trillion) expenditure. The exercises looked at 40 different types of expenditure in 46 organisations from nine countries spanning Europe, North American and Australasia.

The report cites examples where losses have been reduced by up to 40 per cent in 12 months.  Achieving this would free up more than £1.1 trillion globally - a sum greater than the GDP of 175 countries.

Jim Gee, one of the authors of the report and a Partner and Head of Forensic and Counter Fraud Services for PKF Littlejohn, said,

"Fraud is the last great unreduced business cost. If a business was paying six per cent over the odds for its energy and utilities, or rental properties, then management would be quick to act or shareholders and investors would want to know why. There are real financial benefits to be derived from measuring, managing and minimising the cost of fraud."

Gee challenges: "In these current economic times, it will take a brave Chief Executive or Director of Finance of any organisation who turns a blind eye to these findings."

PKF Littlejohn and the University of Portsmouth have made available a free, on-line Self-Assessment Fraud Resilience tool at http://www.pkf-safr.com for organisations to find out how well or badly they are protected.

SOURCE PKF Littlejohn