siliconindia logo
Facebook Twitter google+ RSS Feed

Rising frauds in corporate India to be dealt firmly

By SiliconIndia   |   Tuesday, 06 April 2010, 11:13 Hrs   |    41 Comments
Printer Print Email Email
Rising frauds in corporate India to be dealt firmly
Mumbai: The overall incidence of fraud is rising in corporate India in the last two years and there is a need for Indian firms to deal with fraud risks firmly, according to the KPMG Fraud Survey Report 2010. The report also states that the financial services and consumer markets industry segments specifically, see a higher level of fraudulent activities within their industry, reports PTI.

"The need of the hour is for organisations to realise the importance of putting effective internal control mechanisms in place, so as to manage risks," KPMG Forensic Head, Deepankar Sanwalka, said. The survey indicates 'procurement' and 'sales and distribution' as the most vulnerable areas across industries susceptible to fraud risk.

Financial statement fraud emerges as a major issue for investors. An overwhelming 81 percent of the respondents of the survey perceive financial statement fraud as a major issue in India. "Accountability is no longer restricted to a company as a whole but also streams down to each and every individual. It has become imperative for companies to be vigilant and aware and not just act when fraudulent situations arise," he said.

Ineffective whistle-blowing systems, inadequate oversight of senior management activities by the audit committee and weak regulatory oversight mechanisms are the reasons for the growing worries as well as the increase in the number of frauds that one can see in the industry today, the report said.

"Managing the risk of fraud is essentially no different to managing any other type of business risk. All that it requires is resilience to combat that fraud," KPMG Forensic Executive Director, Rohit Mahajan, said.

Bribery and corruption have come to be viewed as an inevitable aspect of doing business in India by many Indian companies, the report said. Almost 38 percent of the respondents believe that bribery is an integral feature of industry practises and is most rampant in seeking routine regulatory approvals and to win new business from prospective clients, it revealed.

According to 53 percent of the respondent companies, e-commerce and computer-related fraud will be a source of major concern in the coming years with supply-chain fraud, a close second followed by bribery and corruption and intellectual property fraud, the report said.

However, whatever be the type of fraud, 75 percent of the respondents indicate that, except intellectual property (IP) fraud, fraudulent activities were perpetrated by employees, reaffirming that the enemy within poses the highest risk, it said.

Experts on SiliconIndia
Santhosh  K
Sr. Soft. Engg.
Oracle India
Nehal Vyas
Sr. Team Lead
Cyberoam Tech.
Rani Malli
Sr. Director
Philips
Sr. Executive
ISB
Vijay Balkrishna Konduskar
Business Consultant
Imans Web Tech
Dr L P  Sharma
Technical Director
NIC
Reena Khanna
Founder
Solitaireworld
Dellas  Asse
sys-network admin
Computer Station
Sign Up for DailyDose and Read the Day's Highlights
Follow SiliconIndia :
Write your comment now
Submit Reset
Reader's comments(41)
1: Yes there should realize the reader to RSS my feed to RSS commentary, quite simply
Posted by:hooher tod - 06 Sep, 2011
2: Yes, corruption is here to stay. That is why more security measures and audits are introduced into the system, but systems are not fool proof. People in high positions have tremendous power and privileges, they have the company money to back their decisions. This is the area where more number of audit checks are to be conducted by anti-corruption bureau and like agencies. We the common people generally end up paying for ALL forms of corruptions.
Posted by:Moushmi Dasgupta - 14 Apr, 2010
3: Some timeagoI am not sure of the co name but a famos companiespresident in USA was sentenced to a life time.His affence is to show excess proffits in the balance sheet. Any curruption people are not getting punishment.Even if the curruption is proved the punishment is insignificant and people happily come backin tothe market in a different field.There is a need to rewrite the punishment and make them more stringent.
Posted by:B.P.kamalkumar - 11 Apr, 2010
4: Corrupt systems eventually degenarte and collapse. Development without corruption may be slow but its steady. Making money/profits unethically can not be sustained in the long run. But the problem is that majority of our people wish to make a fast buck and in the process help the growth of GDP which is helpful to the ruling class. Do we have any choice, is the moot point.
Posted by:Piyush C.Sharma - 08 Apr, 2010
5:
We have taken a initiative and started a portal called - cwiportal.com .
CWI is an independent whistleblower helpline which not only acts as an internal early warning system for organizations to detect and check malpractices but also helps them create a non threatening environment in which anyone who perceives any activity detrimental to its interests feels free to report it.
CWI helps you interact with the designated authority within your organization in a simple and secure manner while maintaining confidentiality and anonymity.However you can lodge reports using this portal only if your organization has joined this initiative.To communicate your concerns simply click on Lodge Report and enter the organization code communicated to you by your organization. To follow up on any report simply click on Track Report and enter your tracking number and password.
deepak Replied to: Piyush C.Sharma - 16 Apr, 2010
6: Hi,

It only mans it is high time for a war India and pakistan should have a nuclear war and crisis will teach Indian a lesson. In all honesty you cannot make a lot of money so greedy people have become more in the country they have forgot what values are so a war is imminent a nuclear war will set the things right. So that there s no differentiation between politicians and common people. Let the war begin.
Posted by:dennis - 07 Apr, 2010
7:
Rightly said "Dennis the menace". What connection is there between nuclear war and improvement of fraudulent stuff going on in India?
Do you know what is a nuclear war? Everyone would be dead. Think before you write dude.
Monish Replied to: dennis - 09 Apr, 2010
8:
You foolish,anti india dennis, here discussion is going on frads, and you are barking nuclear war....pls read the topic before remark.
niranjan Replied to: dennis - 08 Apr, 2010
9:
Dennis is really out of mind so avoid him.. he don't know what is talking about...
amit sharma Replied to: dennis - 07 Apr, 2010
10: This is should have come long time ago.
http://www.hindujagsl.com
Posted by:Hindujagsl - 07 Apr, 2010
11: Hey guyz why we common people are taking pain in studying any reacting to these high level activities, there are no rules set for Business War success and Love nowadays, As few success stories previously of Immoral people are driving many entrepreneurs so each of these are running towards making themselves as big crocodiles having mouthful enormous money.
whats wrong in that. Doctors reserving seat for their child, Bureaucrats reserving seats for their child, Leaders reserving seats for their child, Dr.Manmohan and Pranav reserving GDP for their Parties no matters how they are achieved,
People in India do n no.s of frauds and then become Member of parliament and people forget or not bother about their past, then why to remember the satyam saga, Many Rome and British kingdoms will be build and perish on their own, not to worry ALL IS WELL!
Posted by:Bivash - 07 Apr, 2010
12: the problem is with the word "la w" or "ben ding"
Posted by:Kaushik - 07 Apr, 2010
13: In the otehr news item, k p m g is be nd ing la ws
Posted by:Kaushik - 07 Apr, 2010
14: SiliconINdia, please tell me what words are illegal.
This is really irritating putting across a simple, relevant message and getting that "illegal" message.
Posted by:Kaushik - 07 Apr, 2010
15: one of our sanskrit niti says ,he who is clrean bty water or mud is not the mr.clean,but he who is clean-handed in money matters is the clean one.financial firms aim at teaching how to make profits at all cost. accounts is only an activity like all others. it is routinely submitted on a date. look at audits if they are satisfied no adverse reports.
Posted by:nagabhushana - 07 Apr, 2010
16: I agree with Mr.Ram's comment.This is spreading as an epidemic.He is absolutely right in his comments.We blame the public sector for hindering growth.Private sector companies with tie ups with consultants,the like as mentioned is making a lot of money,the employees,with the intention of better performance.Ridiculous.
Posted by:nairshree - 07 Apr, 2010
17: For many years the Corruption in Government was blamed by the Corporate Sector in India as the road block to progress. The family led companies usually through over invoicing and LC's overseas created a cash stash, thereby making them billionaires. Today corruption has entered the Middle Management in the Private Sector as well. Purchase Managers in Public Limited and Private Companies are lining their pockets, HR managers through their spouses' companies are making money on the side for every recruitment that happens, Fleet car companies and Realtors have to pay off HR and Admin managers to get empanelled in the company roster. There seems to be very little fair game in society that is under fast decay thanks to unfounded human greed. Basic honesty has been replaced by a voracious appetite to accumulate wealth that rarely can be spent in a life time. Hopefully someday sense should prevail, and things should turn for the better.
Posted by:Ram - 07 Apr, 2010
18:
This is true that money making is only business at corporate level. This is spreading as an epidemic. Financial Audit: is become a joke (audit as per corporate desire0.They auditor keep them safe from their Top Management (Audit company make money)
Code of conduct: Today it is at the top of the jokes. Very seriously the Corporate teaches to thier middle management and the lower class.
Most painfull is the raising of Management intitutions here and there. Govt. has no role to controll. This is one of the source if money by political leaders, Suffering the lower people loosing their invested money.
Recruitment: Company do not controll on attrition. More the attrition more the money by recruitment in the HR managers pocket.
Fraud is everywhere neither it is tied with a particular country or a corporate wherever it is it needs to be removed.
Fraud is everywhere neither it is tied with a particular country or a corporate wherever it is it needs to be removed.
Fraud is everywhere neither it is tied with a particular country or a corporate wherever it is it needs to be removed. Every individuals needs to come forward to remove the fraud. But how ? Corporate ? Middle managemenet ? Lower class ?

C.D.Kundu Replied to: Ram - 11 Apr, 2010
19:
We have taken a initiative and started a portal called - cwiportal.com .
CWI is an independent whistleblower helpline which not only acts as an internal early warning system for organizations to detect and check malpractices but also helps them create a non threatening environment in which anyone who perceives any activity detrimental to its interests feels free to report it.
CWI helps you interact with the designated authority within your organization in a simple and secure manner while maintaining confidentiality and anonymity.However you can lodge reports using this portal only if your organization has joined this initiative.
deepak Replied to: C.D.Kundu - 16 Apr, 2010
20:
That day will come Like 2012 ( a total annihilation ) for a re-start. Then lot of sense will prevail.
at ramaanuj Replied to: Ram - 08 Apr, 2010
21:
Very well said. All true points.
Kaushik Replied to: Ram - 07 Apr, 2010
22: After reading these views from readers , following are my views.
1) India has huge talent compared to any other country.
2) We need to utilize our talent for self development ultimately corporates & then automatically that goes as contribution to country.
3) We need to take sincere efforts towards educating talent for the same.
4)Blaming people is very easy. To turn it in to change is a challenge.
5)Rightly said by one friend here corporates are helping nation in terms of providing jobs as well contribution to JDP of county as well contribution to CSR too.
6)Thanks for this survey.
Warm Regards,
Milind

Posted by:Milind Chaudhari - 07 Apr, 2010
23: Dr.Manmohan Singh introduced PPS model wihout any deterrant system and the many corporates vitiated the Government which was reasonably corrupted earlier has been made completely corrupt.The peoples rights and civil scoiety interests are highly compromised and now the Government officials and the corporate bodies hand in hand loot the common man and we don't know how the Country is moving.Manmohan and Pranab Mulherjee is only bothered about the GDP and least concerned about the corruption and high handeness which ultimately will spoil the democratic frame work of the country itself
S.A.Rahim
Posted by:S.A.Rahim - 07 Apr, 2010
24:
Hi Rahim
your assertions are wild and at odds at fellow indians opinions.Dr Manmohan Singh is doing a excellent job ,Dr Paranab Mukherjee has taken stock of situation prior to and during Global Financial Crisis and put in stimulus in place that helped India avert the crisis and have a good GDP .
Dr Manmohan Singh is a highly educated in economics with a clean image and is always sensitive to matters that concern india's devlopment the UIID project and the RTE (Right for Education) are his initiatives and endorsed by the UPA government to implement social projects more effectively and mitigate the leakages,these schemes alone have the power to lift millions of indians out of poverty.
As responsible Indian citizens we all should be positive and help the schemes to succeed ,that is peoples participation is very important
rama mohana rao anne
sydney australia
rama mohana rao anne Replied to: S.A.Rahim - 07 Apr, 2010
25:
Mr.Rao u live in Australia, and talk about Indian govt.RTE is not a brainchild of Manmohan, it has been debated for long now, so please get your facts right, and how much of fundamental rights are enjoyed by peoplein india is a well known fact, so stop beating the drums...with inflation and unemployment on rise and rise in corruption is inevitable
rahul Replied to: rama mohana rao anne - 07 Apr, 2010
26: Indeed. Fraud starts from usage of pirated versions of software knowingly by many IT cos. Do not get puzzled, some IT firms show losses in the name of CSR. Ultimately they do nothing for the society or welfare, mind it. Talking about IP in India, it is a big joke.
Posted by:Natraj - 06 Apr, 2010
27:
Hi natraj
1. i live in australia Mahindra & Mahindra runs hosipital on wheels in maharastra ,chattisgrah it is a hosipital on the train numerous people have been operated upon
2.Wipro empowers elementary education in Indian schools because Azim Premji believe it is the best way to equip the young Indians
3.Tata's CSR policy has been coined about a 100 years ago and does a lot of social projects in Chattisgarh,Bihar etc.
4.You are commenting pirated software can you give examples of companies ,the reputed ones ,pirated software ordinary poeple do want to get as cheaply as possible ,here too in australia some one says there is a Flemington Market where recyclable mobiles(stolen ,lost ) are recycled ,probably people buying them can be either who cannot afford or some evil people who just want to get it cheaper.
4.Infosys every year sponsors a science prize(significant cash prize about rs 35 lakh ) ,it also takes interns from India and abroad and believes in giving best training ,borading facilities with healthy meals so that interns(graduates) can concentrate on the work in a much better way.
5.If you can provide examples or proof that reputed companies are using pirated software please produce otherwise maybe you are the first person to queue up for such dodgy deals otherwise why will be there such a thriving market in the first place ,and some dodgy guy may be making such copies.

I think you are a big joke ....no wonder people like you will never be greatful to india or companies that have provided with the jobs.
rama mohana rao anne
sydney australia

rama mohana rao anne Replied to: Natraj - 06 Apr, 2010
28:
i m highly impressed by your answers and the facts provided by you. great yaaar
gaurav Replied to: rama mohana rao anne - 07 Apr, 2010
29:
If you are so patriotic then why are you living in Australia & working there especially when there is racial prejudice in that country. Come here & see what is happening & then make comments. Somebody doing some charitable work is only for publicity & not really with their heart into it.
sesha Replied to: rama mohana rao anne - 06 Apr, 2010
30:
Hi Sesha
it is true that I came to australia ,when my grandfather died and i wanted to do my higher education in USA i could not get the visa so I went to bangalore and joined United Telecoms(those days they manufacture C-DOT exchanges) and later worked at Integrated Electronics company domular second stage Bangalore ,one day I saw newspaper advertisement and applied for a student visa to do my masters and sold the only property I had (two acres and seventy cents in the village) and came to australia ,and iam stuck here if at the moment iam unemployed if at all i have monetary resources and my situation improves i will serve india(farmers of india) as I live alone by myself.
hope my indian friends understand me.
rama mohana rao anne
sydney australia
rama mohana rao anne Replied to: sesha - 07 Apr, 2010
31: Fraud is everywhere neither it is tied with a particular country or a corporate wherever it is it needs to be removed.
but giving a blanket statement on indian corporate is unwarrented and harmful.
I do not know why international frauds that have occured have never been mentioned much or highlighted.
what about the huge arms deal between BAE systems and the prince of UAE(Billions of Dollars),this is just one example.
rama mohana rao anne
sydney australia
Posted by:rama mohana rao anne - 06 Apr, 2010
32: These articles are published to convince the investors that their dream is not just a day dream and a thought has begun to check these frauds to help the investors for better returns.

This is nothing but a framed day-dream. By the time we realise about it, significant amount of investment would have taken place in the fraudent world.

Keep a check - yourself.
Posted by:AK Sinha - 06 Apr, 2010
33:
our basic understanding of acccouting subsidy,concessions,insurarance,dipriciation more than 3 metohods,accounting system ,boss/yielding to top officils,are some of the few reasons,
we donot disclose the rawmatrials cost,product cost,year wise in balance sheets,while education we donot teach economiscs as a important subject like maths ,physcis,chemistry, infact economicsis selected as lost option for studies
this more important to teach economics as much as other science since we finally take decesion of buying or selling on money /price /need/demand/oppertuity / value for any thing on ECONOMICS ONLY
SO START ECONOMICS AS FIRST SUBJECT TO BE TAUGHT IPAR WITH ANY OTHER SUBJECTS


SASTRY
sastry Replied to: AK Sinha - 06 Apr, 2010
34: I agree with this report. The indian Government and state Government should take action with strong deterrent effect against individual and corporate fraud.

May be I am dreaming.

Roy
Posted by:Sumit Roy - 06 Apr, 2010
35: Do you really think the soaring fraudulent activities in corporate India, forget "firmly" ?
Posted by:Rajeev - 06 Apr, 2010
36:
I do not think so rajiv ,defintely not indian corporate sector is quite transparent withstood Global Financial Crisis much better .
I do not why KPMG comes up with such thoeries ,fraud is never specific to one country ,community or corporate it is there every where at all places both developed and devloping countries ,actually intensity is higher ,and the affect more cascading from developed world ,take Bernie Madoff(Pozi scheme) ,collapse of Big Banks and companies(Lehman Brothers).
I live in Australia there is bad news here as well there are numerous reports some projects in transportaion sector shelved and never took off.
Every alternate day there is a signifficant amount of drugs seized on the street or houses.
There were cases reported about fraud in media here.
rama mohana rao anne
sydney australia
rama mohana rao anne Replied to: Rajeev - 06 Apr, 2010
37:
Rama Mohana rao sir,
We know fraud is evrywhere..butt you cannot live with it..Companies like KPMG or E&Y publish it cozz..if we live with it..there may be lots and lots of scandal which will again hit Indian economy very badly and in turn to Indian citizens who stay in India..So such type of reports should be taken as learning from corporate sectors within India..and improve their systems to reduce itt..After allwe want to see a better india man..
Pramod Replied to: rama mohana rao anne - 07 Apr, 2010
38:
yep totally agreed constructive criticism is always welcome if seen from a perspective but I find there are some India bashers and haters who are using such reports and adding their own masala spice and ranting additional comments ,i suspect some of them may not be even from India .
So my point is to put everthing in a perspective and relativity and not allow Indias image be tarnished or damaged .yes as a family of India we can introspect and criticise to make things better ,but simply posting hate messages one after the other and taking that as an opportunity is not welcome .In those cases Iam doing my bit as an ambassador of india.
I welcome reports about satyam scam and always commented in the right spirit.
rama mohana rao anne
sydney australia
rama mohana rao anne Replied to: Pramod - 07 Apr, 2010
39:
i totally agree with you sir, the prime reason for KPMG to come up with such statistics and theories after the SATYAM scandal, so the people interviewed must have a lasting impact about the fiasco and answered. I would like to know the stats before the SATYAM scandal, I would not be surprised if the results were quite opposite to the current stats. Anyways nice updates from you Sir.
Aditya Atluri Replied to: rama mohana rao anne - 06 Apr, 2010
40:
We need strict governance, that is only the solution for all problems.

If anybody commit any type of crime, they rarely get punished.

Now there is no ethics in corporate world, they want to make the money anyhow.
Satyandhar Jain Replied to: Aditya Atluri - 07 Apr, 2010
41:
We have taken a initiative and started a portal called - cwiportal.com .
CWI is an independent whistleblower helpline which not only acts as an internal early warning system for organizations to detect and check malpractices but also helps them create a non threatening environment in which anyone who perceives any activity detrimental to its interests feels free to report it.
CWI helps you interact with the designated authority within your organization in a simple and secure manner while maintaining confidentiality and anonymity.However you can lodge reports using this portal only if your organization has joined this initiative.To communicate your concerns simply click on Lodge Report and enter the organization code communicated to you by your organization. To follow up on any report simply click on Track Report and enter your tracking number and password.
deepak Replied to: Satyandhar Jain - 16 Apr, 2010