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Is Occupational Fraud and Abuse a Threat to Irish Businesses?

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Expert analysis from Justin Moran, Director, Forensic & Investigation Services, Mazars and Michael Fitzgerald, Senior Manager, Forensic & Investigation Services, Mazars.

In February 2019, Mazars undertook a unique survey across a broad range of Irish organisations to provide an insight into the level of actual occupational fraud and abuse experienced in Ireland. Occupational fraud can be defined as the use of one’s workplace position to commit a wrongful act or criminal deception intended that results in financial or personal gain. As well as fraud, individuals have also exploited their position within a business for matters associated with conflicts of interest, bribery and data protection abuse, to name a few.

Valuable insights into occupational fraud in Ireland

Mazars’ survey highlighted that Irish businesses had experienced financial loss due to occupational fraud and abuse. Of those senior figures surveyed, 50% had experienced a loss due to occupational fraud and abuse over the past two years, with the average financial loss being between €10,000 and €20,000. 12% of respondents suffered losses higher than €500,000 over the past two years. The research provided valuable insights in respect of the cost of occupational fraud and abuse impacting businesses across Ireland and, more significantly, highlighted the potential vulnerability of organisations.

The principal causes of such losses related to the theft of cash and goods but businesses also experienced losses due to expense fraud, payroll, invoice fraud and conflict of interest issues. While the research indicated that theft of cash was the most common fraud type at 32%, a broad array of abuses was noted, indicating that businesses across all sectors are at risk. Regardless of the amount or perceived severity, fraud fundamentally threatens the viability of a company, impacting not only owners but also employees and customers alike.

A more proactive approach required for mitigating fraud risk

Nearly two thirds (65%) of respondents had not undertaken a formal fraud risk assessment or implemented proactive data monitoring across their business operations. The findings indicated the need for a more proactive approach to identifying and mitigating fraud-related risks and the need for businesses to undertake more proactive fraud risk assessments to determine what controls are in place to deter the threat of fraud.

Approximately 34% of respondents did not have formal investigation procedures or anti-fraud policies in place. Such weaknesses undermine an organisation’s ability to respond to fraud and abuse cases in a structured manner and increase the risk of damage to their reputation and brand value.

Worryingly low level of awareness of legislation among Irish businesses

The findings discovered a worryingly low level of awareness of anti-bribery and corruption legislation amongst Irish businesses, with 50% unaware of the recent Criminal Justice (Corruption Offences) Act 2018. This legislation introduced the new corporate liability offence and allowed for a corporate body to be held liable for the corrupt actions committed for its benefit by any director, manager, secretary, employee, agent or subsidiary.

In recent years, Ireland has seen a large volume of high-profile cases within the media involving individuals across various sectors who have committed occupational fraud and abuse against their organisations. Our first-hand experience has shown that many other cases go unreported, and the true cost, reason and detection goes unreported. 

For more information and to read the full findings of our survey, visit our website page  'Research shows Irish Businesses suffering losses due to fraud and abuse’.

Justin Moran, Director, Forensic & Investigation Services, Mazars, and Michael Fitzgerald, Senior Manager, Forensic & Investigation Services, Mazars.

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