According to the Government, the new Economic Crime and Corporate Transparency (ECCT) Bill will improve transparency among UK companies and other legal entities to strengthen the UK’s business environment.

However, news that ministers are planning to exclude small businesses from this anti-fraud legislation is concerning.

Ministers and other supporters of tougher measures being incorporated into the Bill claim that plans to limit the scope of the proposed changes to larger companies will lead to a continuation of crime.

A spokeswoman for the campaign group Spotlight on Corruption said that the exemption would send “entirely the wrong message” that fraud is not a problem for small and medium enterprises (SMEs), adding that it would be more sensible for the Government to provide strong guidance on what small firms can do to prevent fraud.

There is certainly scope for vigilance, as recent research reveals some sobering facts, including that employee theft costs UK businesses around £190 million annually.

In addition, it usually takes around 14 months before a fraud case is discovered and 43 per cent of fraud schemes are detected by a tip-off.

Roger Isaacs, Forensic Partner at Milsted Landon, said: “This new legislation will help to tackle fraud, but as the recent evidence suggests, this problem afflicts both SMEs and large businesses alike.

“While this new Bill certainly improves transparency and helps to prevent fraud it doesn’t eliminate directors’ and partners’ responsibility within businesses to investigate and take action on fraud.”

Roger said that employing the services of a forensic accountant can also help victims to recover funds that may have been fraudulently misappropriated as well as to advise on how to strengthen governance in future.

“The best way to prevent internal fraud is to have strong governance in place to minimise the chances of it happening.”

Source: FT, various