Financial services hardest hit by fraud
The financial services industry was hardest hit by fraud, suffering $322 million in losses, according the KPMG Fraud Survey.
More than 280 private and public sectors across Australia and New Zealand were surveyed by KPMG, which estimated $373 million was lost to fraud in total.
The majority of these losses - $322 million - were suffered by the financial services industry in Australia and New Zealand.
However, despite increasing evidence that fraud is on the rise, only 15 per cent of respondents see it as a key risk for their organisation.
"Fraud, bribery and corruption are not top of mind for senior management," says Gary Gill, KPMG's national head of forensic.
"Executives continue to ignore the problem despite knowledge that fraud is on the rise."
KPMG believes the $373 million figure is only a fraction of the actual cost of fraud as many incidences go undetected or unreported.
"We see many cases of fraud where management has ignored early wanring signs of accounting irregularities, resulting in the problem festering, ultimately leading to a significant loss which could have been averted hadthey chosen to investigate initial red flags," Gill added.
There is also an increase in major frauds perpetuated by insiders, with almost 30 per cent of internal cases having involved ecollusion.
So-called collusive fraud is fast becoming a significant problem for many organisations, as it protracts the time taken to detect the fraud.
It now takes an average of 665 days before fraud is detected when collusive behaviour is in play, Gill said.
Gill added the survey data revealed that many organisations still lacked a sufficient understanding of their obligations and the risks they face as governments around the world take an increasingly proactive stance in fighting bribery and corruption through legislation such as the UK Briery Act and the US Foreign Corrupt Practices Act.
This is particularly relevant for Australian and New Zealand businesses with US and UK-based operations.
"Recent cases investigated by local anti-corruption bodies and the number of Australian organisations which have had been required to address bribery allegations demonstrates that bribery and corruption is a problem for Australia's public and private sectors, and certainly not confined to offshore dealings," he said.
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