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.
Recommended for you
ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors.
The Financial Services and Credit Panel has made a written order to a relevant provider after it gave advice regarding non-concessional contributions.
With wealth management M&A appetite only growing stronger, Business Health has outlined the major considerations for buyers and sellers to prevent unintended misalignment between the parties.
Industry body SIAA has said the falling number of financial advisers in Australia is a key issue impacting the attractiveness and investor participation of both public and private markets.
