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Fraud at senior management level on rise:Survey
By SiliconIndia | Tuesday, 21 June, 2011
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Bangalore:According to a study conducted by KPMG member firms, it has been concluded that frauds are more likely to be committed by individuals in senior management like finance directors, chief executives etc. rather than by those individuals in the junior level. In 69 countries, 348 cases were investigated for the research by KPMG.
The recession has made it easier for the individuals to commit fraud, it includes such cases like the mis-statement of financial results, theft and expense abuse. A global analysis of fraud trends by the Consultancy suggests that the typical fraudster is male, aged 36 to 45, holding a senior position in finance and has worked for his company for more than 10 years. Compared to women, men are found to be more likely to commit fraud.
The economic downturn and the recession may also be blamed for this kind of frauds because due to this, the companies are forced to cut costs in risk management and control, giving the fraudsters a chance to make fake accounts or draw off funds. But their main motivation is their personal greed which is followed by pressure to reach tough profit and budget targets.
Philip Ostwalt, Richard Powell and Mark Leishman, the authors of the KPMG report wrote, âOrganisations should take some of the blame. For them, it is time to consider how they contribute to fraud when failing to detect or respond to lapses or gaps in controls, or by setting overly onerous targets. There tends to be less fraud in companies that make intolerance of fraud part of the corporate culture and which set realistic and achievable targets for employees."
About 32 percent of the fraudsters work in their companyâs finance department, where they get access to corporate assets, financial reporting and credit lines which gives them enough temptation and an opportunity to commit and conceal their acts of fraud. Other fraudsters are most likely from the executiveâs or managing directorâs office or in operations and sales.
In the 2007 analysis, it took an average of 2.9 years from inception to detect the fraud, but now after comparing with the 2011 analysis, it seems to take longer to detect about the fraud, it took about 3.4 years on an average. Fraud goes on for the longest in Asia compared with other nations, it took an average of about 5 years to detect the fraud and sometimes about 16 percent of the frauds go undetected for 10 years or more. One of the reasons maybe that Asian employees hardly challenge their superiors unlike those in Western Europe and North America, where just 3 percent of fraud goes undetected for 10 years or more.
The recession has made it easier for the individuals to commit fraud, it includes such cases like the mis-statement of financial results, theft and expense abuse. A global analysis of fraud trends by the Consultancy suggests that the typical fraudster is male, aged 36 to 45, holding a senior position in finance and has worked for his company for more than 10 years. Compared to women, men are found to be more likely to commit fraud.
The economic downturn and the recession may also be blamed for this kind of frauds because due to this, the companies are forced to cut costs in risk management and control, giving the fraudsters a chance to make fake accounts or draw off funds. But their main motivation is their personal greed which is followed by pressure to reach tough profit and budget targets.
Philip Ostwalt, Richard Powell and Mark Leishman, the authors of the KPMG report wrote, âOrganisations should take some of the blame. For them, it is time to consider how they contribute to fraud when failing to detect or respond to lapses or gaps in controls, or by setting overly onerous targets. There tends to be less fraud in companies that make intolerance of fraud part of the corporate culture and which set realistic and achievable targets for employees."
About 32 percent of the fraudsters work in their companyâs finance department, where they get access to corporate assets, financial reporting and credit lines which gives them enough temptation and an opportunity to commit and conceal their acts of fraud. Other fraudsters are most likely from the executiveâs or managing directorâs office or in operations and sales.
In the 2007 analysis, it took an average of 2.9 years from inception to detect the fraud, but now after comparing with the 2011 analysis, it seems to take longer to detect about the fraud, it took about 3.4 years on an average. Fraud goes on for the longest in Asia compared with other nations, it took an average of about 5 years to detect the fraud and sometimes about 16 percent of the frauds go undetected for 10 years or more. One of the reasons maybe that Asian employees hardly challenge their superiors unlike those in Western Europe and North America, where just 3 percent of fraud goes undetected for 10 years or more.
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