PWC survey shows rise in fraud by public-sector staff

Fraud is on the increase in the UK's public sector as staff reductions and redundancy fears mean there are few resources being spent on internal controls, according to a report from PricewaterhouseCoopers (PwC).

The accountancy's report, Fraud in the Public Sector, warns that economic pressures have a direct effect on people's ability to rationalise fraudulent actions and that economic crime has already risen in the past year. Ian Elliott, a PwC partner, said: "We know that these pressures are going to be felt sharply in the public sector in the coming years. Public-sector fraud has a disproportionately negative effect on reputation, employee morale, business relationships and those with auditors."

PwC analysed the results of senior manager surveys at government and state-owned enterprises around the world, including 44 UK organisations. The survey found that 80 per cent had reported "asset misappropriation" and four out of 10 reported financial statement fraud. In the UK, the response showed that incidence of crime was far higher than the global average.

The survey also shows that more fraud is committed by junior staff in the public sector compared with the private sector where middle managers are more likely to commit fraud.