Frauds by employees in Indian firms? It is very common

Frauds by employees in Indian firms? It is very common

Friday, 26 February 2010, 12:58 Hrs   |    3 Comments
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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.

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Reader's comments(3)
1: This is extremely bad to demark a country's reputation by just 1 or 2 examples. What about the Enron Scandal ? Was that also done in India? PwC was auditing Satyam. Why did it not do its job properly. Now it is trying to show that all Indians are bad, and prone to frauds. That is extremely bad of a big company like that to make such statements just to cover itself. These kind of headlines should be avoided too.
Posted by:Deepak Jain - 01 Mar, 2010
2: "Yadha Rajah, Tadha Praja"

The psyche of the man is determined by the psyche of his ruler. If a man is corrupt, it speaks of the corrupt ruler who controls the man's existence. Corporate Governance is full of corruption and CEOs are dishonest and use Company Funds as if it is their pocket money. Corporate Governance has no moral and ethical standards and does not distinguish between personal gain and Corporate interest. Corporate wealth is routinely squandered, plundered, and looted.If Companies cannot define and protect their assets, how could they control the employees?
Posted by:Rudra Rebbapragada - 26 Feb, 2010
3: True......In India there has been so many frauds that have been done.
Posted by:Mitesh - 26 Feb, 2010