The total number of fraud cases in the UK rose by 14% in 2004, according to the latest figures from KPMG's Fraud Barometer, while the overall value of the frauds fell by 12%

The drop in value indicates that attempts by Customs and Excise to clamp down on big tax frauds continue to bite, although the rise in the number of cases signals a growing problem for UK companies.

In all, 174 fraud cases came to court last year, with a total value of just under £330m. Over the past five years, there has been an almost threefold increase in fraud cases being tried in UK courts.

Management and employees accounted for a third of all cases, defrauding their companies of around £106m. The research reveals a growing problem with workers processing payments to bogus companies or adding fake workers on to the payroll. Last year, UK businesses paid several million pounds to phantom workers and almost £70m in bogus invoices. Stealing or forging company cheques also remained a popular way to remove money from a business.

The Fraud Barometer's findings follow a YouGov survey commissioned by KPMG at the end of 2004, which showed that of those who had witnessed wrong-doing at work (44% overall), 23% cited colleagues processing fake transactions. In one case tracked by the Fraud Barometer, a payroll employee simply sent names of bogus employees to the accounts department, which then set up weekly payments into her account. The employee got away with over £103,000 and was only discovered by accident. In another case, a manager of a High Street chain submitted fictitious invoices for shop refurbishment. In a 30 month period the employee got away with over £400,000.

The activities of organised crime continue to dominate the large-scale fraud cases, with professional criminals, involved in VAT scams, counterfeiting and tax evasion accounting for 54% of all frauds by value, up 13% on 2003.

The Government is still the biggest victim, with fraud costing £174m in 2004 in lost revenue.

David Alexander, fraud investigation partner at KPMG, said that many of the frauds could have been avoided. "Simple but robust internal controls can prevent management, employees, customers and suppliers from exploiting weaknesses."