Frauds by employees in Indian firms? It is very common

Bangalore: Embezzlement by employees in Indian companies is a very common phenomenon, with many saying that the $4 million that a Wipro employee is said to have embezzled is a relatively ordinary figure, reports Times News Network.

Wipro which is now instituting a high-level internal probe, is said to have even mandated Ernst & Young to verify the audited accounts. According to experts, the reason for such frauds typically is lax controls.

According to Times News Network, Kashi Memani, former Chairman and Managing Partner of Ernst & Young India said that such frauds happen when a company does not conduct regular internal audits, do not have in place a tight set of internal controls and most importantly, when they decentralize the power of checks and balances to people, down in the hierarchy.

"It is very important for companies to change the set of people who have access to accounts on a regular basis. But, one must be careful not to change people either too soon or wait for too long. Many a time people who have for long earned the company's trust of handling accounts, tend to misuse this trust," said Memani.

Pavan Duggal, senior Supreme Court lawyer and cyberlaw expert says that the Wipro case demonstrates the need for corporates to proactively comply with Indian cyberlaw. "Had the company complied with all the parameters of the amended IT Act, such an occurrence could have been avoided.The acts complained of are offences under the IT Act but the law would only move once the police receives a complaint," Duggal said, and added that failure to ensure the security of its information systems could expose Wipro to potential legal exposure.

However, Wipro is not an exception. A survey titled 'Fraud - the enemy within' released by accounting firm PricewaterhouseCoopers last month finds that accounting frauds in India had increased since 2007. Accounting frauds constituted the No.1 economic crime, with 62 percent of the respondents who reported an economic crime in the previous 12 months saying that they had suffered one or more types of accounting fraud.