One of Watford's leading accountants believes many local firms making staff redundant are not protecting themselves sufficiently against the increased likelihood of fraud within their organisation.

According to Mark Wilson, managing partner at the Watford office of national accountants Baker Tilly, a significant number of Businesses are unaware of the risk and should be reviewing their internal procedures as a matter of urgency.

He said: “Companies have been in cost-cutting mode for some time now, but many do not appreciate the wider repercussions that redundancies can bring.

“The segregation of duties is fundamental to establishing a proper control environment within a business, but the loss of staff inevitably results in roles being combined. This withering of established controls can easily increase the opportunities for undetected fraud.”

According to the government’s latest statistics, 563,000 people across the UK were made redundant in the first six months of this year. Wilson believes there is a real risk that there will be more fraud, and that a greater proportion will go undetected.

This comes at a time when media reports highlight that publicly recorded corporate fraud soared to £960m in the first six months of this year, compared to a figure of £1.2bn for the whole of 2008.

He added: “Whether it is IT, payroll or admin, now is definitely the right time to make full risk assessments within different departments and monitor procedures in the light of job losses. Following this, it is important to implement new and appropriate checking procedures.

“The majority of people who commit fraud do so when they see poor process controls and an opportunity to make a tidy profit. However, the organisation’s culture plays an important part in determining whether its employees are likely to take advantage of such opportunities.

“Businesses need to encourage a sense of togetherness and a feeling that they are working towards the common good of the business. Companies that can do this successfully are in a far stronger position to tackle future dishonest behaviour amongst staff.

“Being prepared is also important. Rather than waiting for something to happen, I’d recommend all organisations in the current climate seek assistance and draw up new fraud prevention procedures on a proactive basis.”