Gloucestershire businesses lost a total of £2,782,013 through employee fraud in 2016-17.

And that is likely to be just the tip of the iceberg, with many incidents going unnoticed or unreported.

The data, obtained by audit, tax and consulting firm RSM, showed that South West firms lost a total of £5.2 million last year. Nationally, losses through employee fraud topped £40 million.

Internal frauds can include payment fraud, procurement fraud, travel and subsistence fraud, exploiting assets and information or receipt fraud.

According to recent research from fraud prevention organisation CIFAS, 47 per cent of internal frauds are discovered as a result of internal controls and audit. However, a growing number are coming to light as a result of staff raising concerns with line managers or through whistleblowing channels.

Akhlaq Ahmed, forensic partner at RSM (pictured), said: "Understandably, employers want to demonstrate that they trust staff to carry out their duties, but there is a balance to be struck by making sure that sensible and effective oversight and controls are in place to prevent abuse.

"In our experience, fraud is often carried out by employees who may have been in post for some time and who know where the weak points are. They can often be motivated by greed, lifestyle aspirations, debts or addictions.

"Embedding an effective whistleblowing culture is heavily reliant on the right tone being set from the top. Ultimately, if employees feel confident enough to raise concerns, companies can help protect themselves from fraud losses and conflicts of interest, in addition to any resulting regulatory or legal action."

RSM advises companies to consider the following preventative measures:

Allocate a whistleblowing champion

Implement training programmes across all levels of the organisation, including at board level

Develop clear policies, processes and reporting

Deliver an independent investigation service to review and investigate concerns

Introduce an independent whistleblowing hotline for employees to report suspicions of unethical, illegal or improper conduct