November 17, 2021
Published: The Accountant
By Verdict Staff
Following a 24% rise in fraud during Covid-19, the UK government relaunched the Joint Fraud Taskforce at the end of October, seeking to counter fraud through public-private partnership. Three new charters have also been signed, including the Accountancy Sector Fraud Charter. Anne Davis, director of professional standards at the Institute of Financial Accountants (IFA), takes a closer look.
Fraud represents over a third of all UK crimes, and the ambition of the new charters is to close the vulnerabilities that are exploited by criminals to conduct fraudulent activity.
This is part of the UK’s wider Economic Crime Plan 2019-2022 which seeks to tackle the £37bn ($50.13bn) problem that is economic crime in this country, in a bid to protect individuals, undermine criminal activities and funding, and make the UK a safer place to do business.
Unlike the charters for the other sectors – retail banking and telecommunications – which focus on the direct role the sectors play in managing fraud, the accountancy charter highlights the vital but ancillary role that accountants have in managing fraud.
“Whilst the proportion of fraud that involves an accountant of the accountancy sector may be small, the role that an accountant plays can be important” begins the charter. Our sector has a unique and influential role in managing organisations’ finances, which makes us a primary line of defence, but also a potential target for fraudsters.
As well as highlighting the ways that the sector is at risk from fraud, including impersonation and targeting, the charter specifically seeks to address a number of vulnerabilities that have been identified. These are:
- Action 1 – improved information: The current lack of fraud assessment for the accountancy sector makes it difficult to quantify the current and emerging sector fraud. This will be addressed with a fraud intelligence brief to identify major risks and encourage sharing of information between the sector and law enforcement on an ongoing basis;
- Action 2 – fraud awareness toolkit: This involves developing a toolkit to support accountants to identify and combat fraud and fraud risk. This will be made available to all accountants in due course;
- Action 3 – enhancing Companies House: As part of the wider Companies House reforms, views will be invited from the sector to help enhance its role and improve the reliability and efficacy of data;
- Action 4 – changing customer behaviour: A government-sector partnership will seek to raise consumer awareness of key issues and therefore reduce vulnerability. The ambition is increased fraud awareness through existing and new communication strategies, which is viewed for its long-term gains in fraud prevention.
Ultimately, what these reforms and the charter mean for the sector is increased awareness, transparency and oversight. It will affect every individual accountant and firm, but the brunt of the initial effort will be borne by the professional bodies working in the sector.
The IFA welcomes the launch of the Accountancy Sector Fraud Charter which will enhance cross-sector collaboration in the fight against fraud. Collaborative working across sectors has the potential to improve communication on new and emerging fraud threats as well as education, which will benefit our members, their clients, their employers and wider society. We have already contributed to stakeholders’ meetings and submitting representation on Companies House Reforms and look forward to continuing to work with Companies House to improve that usability of data held in Companies House.
The IFA, and its members and firms, are committed to preventing, detecting and reporting fraud to the proper authorities. We will be working with law enforcement, accountancy sector professional bodies and other stakeholders to gain a better understanding of fraud threats, increase fraud awareness and provide tools to help our members combat fraud.
For further information on fraud prevention in the accountancy sector, the IFA is sharing a session on fraud, including proactive steps for prevention, as part of its International Conference on 25 November 2021.