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PricewaterhouseCoopers Indicates Fraud Remains a Key Global Threat Word Count:
277 Summary:
Of those reporting fraud, 69 percent were of the opinion that fraud had affected their share price, 84 percent said that it had increased the costs of dealing with regulators and had incapacitated their relations with other companies and 88 percent were of the opinion that it had dented their brand and impacted staff morale.
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PricewaterhouseCoopers Indicates Fraud Remains a Key Global Threat - November 2007
Article Body:
Of those reporting fraud, 69 percent were of the opinion that fraud had affected their share price, 84 percent said that it had increased the costs of dealing with regulators and had incapacitated their relations with other companies and 88 percent were of the opinion that it had dented their brand and impacted staff morale.
The study, entitled "Economic Crime: People, Culture and Controls," found that economic crime affects companies of all sizes and is all but universal. Fraud levels never dropped in the past eight years since PricewaterhouseCoopers started the survey. Only 11 percent said that in the next two years they will probably become the victims of fraud in their own country.
Steven Skalak, Global Investigations and Forensics Leader, PricewaterhouseCoopers said, "Controls alone are not enough. The answer lies in establishing a culture that supports control efforts and whistle-blowing with clear ethical guidelines." Among companies having 5,000 employees, 62 percent reported being fraud victims.
According to the study, the reasons that were cited to enlighten why fraud is committed by individuals include luxurious lifestyle, financial inducements, and career disappointment. In 40 percent of the frauds that were reported, employees lacked awareness of wrongdoing, and 26 percent denied the financial consequences to the company.
Fraud was as common in Brazil, China, India, Indonesia, Mexico, Russia and Turkey (E7 emerging economies) as in more developed countries, but the cost of fraud was considerably high in emerging countries. Altogether, the E7 countries accounted for 45 percent of the US$4.2 billion in financial loses reported worldwide.
Skalak said, "Companies doing business in emerging economies need to understand the fraud risks they will face in different cultures and anticipate that they may be asked to participate in inappropriate schemes."
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