Financial crisis aggravating corporate fraud
The financial crisis will exacerbate the increase in corporate fraud in Australia and New Zealand, according to KPMG’s recent fraud survey.
Fraud has been on the rise since 2006, with gambling as the most common cause. Forty-four per cent of the total value of fraud was caused by gambling, an increase of 100 per cent over the 2006 survey.
The head of KPMG Forensic’s Australian practice, Gary Gill, said 45 per cent of all respondents to the survey reported at least one fraud during the two-year survey period, and 22 per cent of organisations ignored warning signs.
Poor internal control was highlighted as one of the main failures in preventing fraud from occurring, with pre-existing poor internal control being a driving factor in the occurrence of 26 per cent of frauds, Gill said.
“Conversely, internal control is the most common method by which respondents detected their largest fraud, covering 42 per cent of detected cases. Defrauded organisations most likely did little to prevent the fraud occurring and in fact missed a number of warning signs before eventually uncovering the fraud,” Gill said.
Sixty-three per cent of respondents said they would report the fraud to the police, with 43 per cent prepared to immediately fire the offender.
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