Company fraud in Yorkshire has fallen dramatically – bucking a national trend which has seen the cost of commercial crime rocket to more than £1bn for the first time.

According to the latest update from accountants BDO, company fraud in the UK rose to £1.06bn in the first half of this year, and was almost the same as for the whole of 2008.

In Yorkshire it was a different story, as reported fraud decreased to just under £15m – a drop of nearly 95 per cent on last year’s record £280m.

It puts the region fifth in the national league table of corporate fraud, behind London and the South East, Wales, the North West and the Midlands.

Nationally it is the first time fraud levels have risen above the £1bn barrier in the seven years BDO has been conducting its survey.

Simon Bevan, head of fraud services at BDO in Leeds, said: “In the past we have seen a focus on procurement-type frauds with public and private sector organisations paying too much for goods and services.

“However, as the recession continues we are seeing companies where management commit fraud by either setting up ‘companies within companies’ or diverting lucrative contracts away from the company to third party accomplices.

“Linked to this unethical activity is an increase in insider dealing where management don’t directly defraud their employer but their actions leave them open to stringent, and often public, enforcement action by financial regulators.”

Mr Bevan predicts competition between regulators to ‘act tough’ will lead to an American model of intrusive regulation.

He said: “We have a combination of political pressure and the understandable desire for the public sector and corporates to be seen to have a zero tolerance policy. We are therefore likely to see increasing regulatory action.”

BDO predicts the average UK fraud will top £7m by the end of 2010 and has urged firms to continually assess the level of fraud and fidelity cover they need.