There Are More Crooks Out There!!

On SBT: http://www.businesstimes.com.sg/sub/news/story/0,4574,445683,00.html?

• Published July 1, 2011
  
  Fraud is a clear and present danger: KPMG
  
  
  Survey shows it has risen in companies since global crisis
  
  By MICHELLE QUAH
  
  (SINGAPORE) The average number of fraud incidents per company in Singapore has more than doubled since the global financial crisis, while the estimated total cost of these incidents has also risen sharply.
  
  The KPMG Singapore Fraud Survey report 2011 released yesterday showed that the average number of incidents reported per organisation among those hit by fraud was 9.0 in 2011, compared to 3.8 incidents in 2008.
  
  One in five survey respondents said they were aware of at least one fraud incident within their company over the past two years - a similar proportion to KPMG's previous survey reports in 2004 and 2008.
  
  The total estimated cost of these incidents was $6.5 million in 2011, up from $5.3 million three years ago.
  
  And, according to the survey, internal sources remain the major fraud threat.
  
  'The survey findings that 17 per cent of fraud is carried out by senior members of a company is of great concern,' said Bob Yap, head of Forensic at KPMG in Singapore. 'These individuals set the ethical tone for the organisation and are in the position to do the greatest harm.'
  
  The survey also found that 46 per cent of fraud incidents were perpetrated by employees - making it a total of 63 per cent of frauds being 'inside jobs'.
  
  Mr Yap explains the finding: 'This report largely spans the period of the global economic crisis, where companies faced the greatest economic turmoil in recent years. One effect is that it led to an increase in retrenchment and resignations and employee misconduct frequently comes to light only when the employees leave their organisation.'
  
  Many will remember the $12-million fraud perpetrated by two former employees of the Singapore Land Authority, which was only discovered after the two men had left the employment of the statutory board.
  
  KPMG, in its survey, found that the three main causes of fraud were unfamiliarity with red flags of fraud (59 per cent), weakness in IT security (56 per cent), and weakness of management or board oversight (50 per cent).
  
  Yet, despite this, only 31 per cent of companies said they have conducted fraud awareness training for staff or management. A slightly larger proportion (37 per cent) said they had an anti-bribery and corruption compliance programme in place, while 62 per cent said they had no plans to design and implement a fraud incident response plan.
  
  Mr Yap said: 'These (causes of fraud) relate to weak preventive measures on the part of the victims, rather than any particular ingenuity or sophistication on the part of the perpetrators. The fact that internal controls continue to fail or are being overridden suggests that companies should pay greater attention to internal threats. Staff need to understand their role in fraud prevention if they are to be an effective component of an organisation's defences.'
  
  The survey also, for the first time, covered companies' approach to bribery and corruption. And it showed that bribery and corruption compliance is a challenge: 57 per cent of respondents were unfamiliar with Singapore's own Prevention of Corruption Act, while 85 per cent were unfamiliar with the UK's new Bribery Act 2010.
  
  'Many anti-bribery and corruption enactments have extensive extraterritorial reach and draconian sanctions, which means they bring significant risks to companies that trade abroad and have any connection with either the US or the UK,' Mr Yap said.
  
  He said companies should: ensure an ethical tone from the top and fraud training to help create a culture of fraud prevention and detection; have risk assessments to ensure the continuing effectiveness of controls, as well as a fraud response policy to help a company respond to fraud in a swift and effective manner while minimising damage.
  
  'The total elimination of fraud will never be possible. However, companies can go a long way towards protecting themselves by ensuring that fraud risk management is embedded in management and governance processes and spread effectively throughout the organisation,' Mr Yap concluded.
  
  KPMG's 2011 survey covered directors and senior executives across a broad range of industries and from companies listed on the Singapore Exchange.
  

Posted in: Accounting Fraud,Market Fraud