Tough times 'increase risk of insider deception'

Employee fraud ranging from cheque fraud to petty cash theft typically increases during economic downturns as workers come under increasing financial pressure at home and cutbacks stir potential resentment - and smaller firms can be left particularly exposed.

According to the Wall Street Journal, small businesses often lack the internal structures and resources to monitor for potential fraud - and in an environment where revenues and bank balances are dropping almost across the board, it can be difficult to detect wrongdoing until it is too late.

James Ratley of the Association of Certified Fraud Examiners (ACFE) told the publication: "A lot of times a small business will close its doors and may never know they were defrauded."

If companies do uncover fraud, they should ideally recruit an accountant and a lawyer before proceeding. Rushing into a confrontation can blow their chances of recovering stolen money, Mr Ratley noted.

According to ACFE figures from the US, the majority of employee fraud is linked to expenses and time billing.

Recent figures from the UK fraud prevention service Cifas found that incidents of the crime increased by 16 per cent in 2008.

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