Feeds

Finance managers top company fraud list

Absolute power corrupts absolutely

Security for virtualized datacentres

Company fraudsters often get away with their crimes for five years, committing as many as 50 undetected frauds, according to the forensic department of audit firm KPMG.

The firm has analysed 360 cases in which its forensic department has been involved and found that a third of cases involve more than 50 acts of fraud, while two thirds of fraudsters commit acts undetected for between one and five years. One tenth of fraudsters go undetected for more than six years.

The perpetrators of the crimes are most commonly long-serving, trusted managers in the finance department. Most are employed for six years or more when they commit their first act of fraud, and are motivated by greed and the opportunity presented by their position.

The consequences of single frauds can be devastating, according to the research. The total loss is more than €1m in 42 per cent of cases, it said.

"Companies clearly have a challenge on their hands," said Ken Milliken, head of forensic for KPMG in Scotland. "Over 60 per cent of perpetrators are members of senior management, whose status in the company makes it easier for them to bypass internal controls and inflict greater damage on the company."

Aged between 36 and 55, the typical fraudster is male, operating on his own and working in the finance department. He is a manager whose activities are made possible by weak internal controls.

While management reviews caught 21 per cent of instances, the most common way in which companies found out about fraud was through employees who had found out about the activity and informed the company.

"Given the repeated and extended nature of most frauds, companies need to work extremely hard to detect frauds earlier through tighter internal controls, data analytical tools, and more widely publicised fraud reporting mechanisms," said Milliken.

"Recoveries of losses from fraud can take several years to be completed. Prevention, such as introducing ethics and integrity measures at the top management level, is always a more efficient and cost-effective means."

Companies are rarely open about having suffered from fraud. Two thirds of the firms studied by KPMG issued partial information or none at all about the attacks, and in most cases no public authority such as the police were ever informed. Investigations, it found, were almost always private and internal.

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

Choosing a cloud hosting partner with confidence

More from The Register

next story
Scrapping the Human Rights Act: What about privacy and freedom of expression?
Justice minister's attack to destroy ability to challenge state
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
Hey Brit taxpayers. You just spent £4m on Central London ‘innovation playground’
Catapult me a Mojito, I feel an Digital Innovation coming on
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
EU probes Google’s Android omerta again: Talk now, or else
Spill those Android secrets, or we’ll fine you
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.