FRAUD from within has been identified as a real threat for Guernsey companies. KPMG’s recent survey – Profile of a Fraudster – has revealed that 89% of them target their own employer.

‘Companies should be extremely vigilant. Fraud doesn’t know any barriers,’ said Shankar Sanketh, KPMG Channel Islands consultant.

‘It is impossible to cover yourselves 100% but everybody within the company should be aware of the risks of fraud.’

The survey revealed that senior management, including board members, represent 60% of all fraudsters, with an additional 26% involving management level staff.

‘Executives are entrusted with sensitive information yet are often in a position where they can override internal controls,’ said Mr Sanketh.

The study revealed that fraudsters were most likely to work in the finance department, followed by operations and sales.

‘There are ways that companies can negate the risks and it is important that one member of staff isn’t responsible for too much.

‘For example, ensure that the person responsible for pay-roll doesn’t have access to HR information as they could manipulate data and create fictitious employees,’ he said.

‘It is the board of directors’ responsibility to ensure that controls are in place. There should be detective controls to identify when errors have occurred, preventative controls to reduce the risks and directive controls such as a fraud response plan.’

The survey revealed that 91% of perpetrators committed multiple fraudulent transactions, with 67% doing so for up to five years.

‘This is why it is so important for companies to undertake an annual internal audit review of their risk and control frameworks and for them to invest in regular training for staff.

‘All employees should feel that they have the skills to identify possible fraud and the confidence to be able to report suspicious activities.’

Mr Sanketh added that companies in the Channel Islands faced additional pressure.

‘Low unemployment and the need to have staff with specialist skills mean that companies often recruit from across the world and so it is essential that HR departments undertake thorough background checks to ensure that staff are honest.’