Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Fraud An Increasing Problem For Businesses

Fraud An Increasing Problem For Australian And New Zealand Business: KPMG Survey

Fraud is an increasing problem for Australian and New Zealand business according to KPMG’s Fraud Survey 2002.

The 2002 survey was released today (9 April) by KPMG’s Auckland Managing Partner – Jan Dawson. It is the fifth edition of the biennial survey which has become a leading source of information on fraudulent activity against Australian business. Fraud against New Zealand business was included for the first time in the 2002 survey.

The 2002 survey attracted 341 respondents from Australia and 20 from New Zealand’s largest private and public sector organisations. Fifty five% reported the detection of at least one fraud incident in the survey period (October 1999 to September 2001). Respondents reporting at least one fraud incident suffered losses totaling $273 million – an average loss of $1.4 million per organisation. This represents a jump of almost 40% over the average loss reported in the 1999 survey.

“The survey shows that fraud is not just alive and well in Australia and New Zealand – it is thriving and the trends have similar patterns in both countries,” said Jan Dawson.

“Organisations are being attacked on two fronts – people external to the organisation on the one hand and management and non-management employees on the other. It is interesting that more than one third of survey respondents reported that warning signs ignored by the organisation would have led to earlier detection if they had been acted upon,” she said.

In other major findings: dishonest managers accounted for the highest proportionate losses outside the financial services sector – 40% of losses by value representing an average loss of $96,732 per fraud; within the financial services sector, the overwhelming proportion of loss was suffered as a result of external attack – 91% of losses by value representing an average loss of $3,585 per fraud; 52% of the losses committed by external parties were credit card related; 92% of organisations with more than 10,000 employees experienced at least one fraud incident and averaged losses of $17.8 million per organisation; more than $30 million was lost to fraud in off-shore operations, an increase of more than 100% over the loss reported in the 1999 survey; theft of inventory and plant continues to be the most common form of internally instigated fraud with more than 40% of frauds being of this type; more than 62% of major frauds detected by respondents during the survey period were reported to the police; and internal control was a factor in identifying only 23% of frauds detected– the remaining fraud incidents were detected by various other means including: notification by other employees and management and external parties including police and suppliers.

Jan Dawson said the survey looked at how organisations respond to fraud. It found that most public and private sector organisations failed to implement a number of relatively simple procedures that can detect fraud and prevent it recurring.

“Many organisations experiencing fraud compound the reputational impact by treating fraudsters with undue leniency. A common pattern is for the victim organisation to dismiss the perpetrator without reporting it to police. The fraudster then moves on to the next organisation and commits further fraud, often using a similar modus operandi,” she said.

He added that, while fraud had come out of the shadows in many organisations, there was still a perception that fraud only occurred in other organisations.

“Fifty percent of all respondents believed that fraud was a major problem for business generally, yet only 17% said fraud was a major problem for their own organisation. This implies a reluctance to believe there is a deficiency in one’s own internal controls and fraud management strategies or in the integrity of the entity’s own people. This reaction is not unexpected, but it suggests a false sense of security pervading many businesses on the subject of fraud.”

“This is reinforced by the fact that more than 60% of organisations said they neither planned, nor implemented, appropriate fraud control strategies,” he said.

Alan Isaac, KPMG Chairman said a clear lesson from the survey is that organisations without effective fraud control systems and risk management strategies significantly increase their risk of loss.

“These measures are simple and inexpensive, particularly when compared to the potential losses,” he said.

Ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>

ALSO:

Half A Billion Accounts: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>

ALSO:

Half Full: Fonterra Raises Forecast Payout As Global Supply Shrinks

Fonterra Cooperative Group, the dairy processor which will announce annual earnings tomorrow, hiked its forecast payout to farmers by 50 cents per kilogram of milk solids as global supply continues to decline, helping prop up dairy prices. More>>

ALSO:

Results:

Meat Trade: Silver Fern Farms Gets Green Light For Shanghai Maling Deal

The government has given the green light for China's Shanghai Maling Aquarius to acquire half of Silver Fern Farms, New Zealand's biggest meat company, with ministers satisfied it will deliver "substantial and identifiable benefit". More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news