Larger businesses are experiencing far higher levels of fraud than smaller businesses as fraudsters seek to exploit vulnerabilities in organisations with higher numbers of employees, according to a survey by accountancy and advisory firm BDO.

While a quarter (27%) of small businesses surveyed by the firm said they had suffered fraud in the last five years, the figures were significantly higher for the two largest categories of business – 81% for those with between 1500-2000 employees and 60% for businesses with more than 2000 employees.

Overall, the number of organisations that have suffered fraud incidents during the last five years has significantly decreased. Four in ten businesses (42%) said they had experienced fraud, a notable drop from 83% the previous year. Additionally, the occurrence of multiple fraud incidents has reduced from 49% to 15%. In terms of fraud reduction, 46% of the 500 businesses surveyed reported less fraud than last year, while only 9% saw an increase.

Stephen Peters, head of investigations at BDO LLP, said: “Fraud remains a significant problem for individual businesses and the wider economy. It is noteworthy that over a third of surveyed businesses estimate that their fraud losses are 5% of turnover or higher. These losses directly impact profitability and can therefore have catastrophic knock-on effects. This is consistent with the scale of issues we regularly see when conducting investigations.

“It is clear that large businesses are particularly tempting targets for fraudsters who are lured by the prospects of higher gains and attracted by the potential vulnerabilities and entry points associated with organisations with high employee numbers.

“However, this year there are some definite positive trends. Nearly half of the businesses surveyed experienced less fraud than the previous year, and over three-quarters have started preparing for the new failure to prevent fraud offence.”

According to the report, whistleblowing was the most common method of fraud detection, accounting for 19% of cases. Recovery of amounts lost remains a significant challenge, with 58% of businesses expecting to recover less than 10% of their fraud losses by value.

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