Over 70% corporates believe that in India, over the next two years, fraud will increase. Also, theft of intellectual property and IT related fraud will rise, states the KPMG survey released on Tuesday.
While releasing the survey report, Deepankar Sanwalka, head forensic services, KPMG India said, ?With an increase in the number of business transactions combined with the lack of effective monitoring, frauds are a real-time threat for most corporates in India.? Further he added that it comes as a surprise that even the larger companies operating in India do not have adequate risk management strategies. ?Soon companies operating in the Indian marketplace shall be under greater pressure to implement better practices in corporate governance, corporate disclosure and risk management,? said Sanwalka.
India is perceived as a fraud haven with over 75% of the respondents to the KPMG survey considered that fraud remained undetected. This follows by inadequacy of anti-fraud measures and unethical behaviour of employees.
This could mean that organisations in India that remain passive in their approach to deal with fraud may be a perfect breeding ground for fraud, suggests the findings of the latest KPMG report on fraud.
The findings of the report also suggest that the threat of fraud comes mostly from within the organisation. Majority of the respondents believe that the employees pose the maximum threat to an organisation and the senior management as compared to other employees is more likely to commit fraud. The inherent responsibilities and trust associated with senior positions and access to confidential company information that come with the managerial position create the risk that fraudulent acts may occur.
The KPMG report highlights that typically, companies refrain from taking legal action against fraud perpetrators and prefer separating the perpetrator of fraud from the company (employees) or stop dealing with them (external parties). Action taken by organisations greatly depends upon their outlook and tolerance towards fraud as well as their appetite to deal with law enforcements, should they choose to prosecute perpetrators. The survey comprises of respondents from across the industry and at different levels in the organisations. Close to 25% of the respondents were at the level of an executive director, MD or CEO. Approximately 30% of the respondents were CFOs of firms.
