Public cuts mean more hands in till

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FIDDLING in the public sector is on the rise, partly due to more widespread ill-will, an investigation shows.

PriceWaterhouseCoopers found 60 per cent of public sector organisations had fallen victim to fraud in the last 12 months, up from 52 per cent in 2009.

Fran Marwood, director in PwC’s Yorkshire forensic accounting team, said: “An increased focus on costs may be uncovering scams that have run for many years, but a deterioration in industrial relations is also playing a part as loyalty and employee engagement are eroded by redundancy announcements and pay freezes.

“In these scenarios there is an increased risk of some employees, and indeed sub-contractors, maximising their benefits on the way out through fraud.

“Spending cuts have created ill-will among public employees in some areas and, in others, more opportunities for government workers to cross the line.

“More opportunities for fraud are created as mid-office functions are stripped away and responsibility for auditing and authorising activity is spread more thinly.”

The survey of over 110 senior representatives of government and state-owned enterprises reported that accounting fraud has, for the first time, overtaken asset misappropriation as the number one economic crime in the public sector. Accounting fraud encompasses cooking the books, fraudulent credit applications and unauthorised transactions.