Fraud in Asia takes longest to detect: KPMG global survey
21 Jun 2011
New Delhi: Frauds take longer to detect in Asia compared to anywhere else in the world, reveals the latest KPMG survey, Who is the typical fraudster. The duration of fraud prior to detection in Asia is an average of five years, with 16 per cent of frauds going undetected for 10 years or more, compared to 4.2 years in North America and 3.7 years in Western Europe.
The size of the fraud too varies from region to region; for example fraud caused an average loss of $1.4 million in Asia Pacific, $1.1 million in the Americas; and in $900,000 in Africa and the Middle East.
The survey analyses the pattern of fraud or financial misreporting from 348 cases across 69 countries, selected from the thousands of cases which KPMG has investigated for its clients. Many of these cases have never been made public.
Rohit Mahajan, executive director - forensic services, KPMG in India, attributes this to the booming economy. ''Companies are too focused on the front end (growing the business) rather than the back end (the support functions) so red flags get ignored or treated as one-offs. When frauds blow up, it's typically several years down the line, when the value of the deception has multiplied and all the warning signs have been missed,'' he says.
Mahajan points out that few companies pursue legal remedy when faced with fraud. ''Enforcement takes up too much time, which companies are unwilling to spend. The company's response depends on its tolerance to fraud and its appetite to deal with legal channels.''
Corporate fraudsters are typically male, 36 to 45 years old (42 per cent) who often commit fraud against their own employer. Additionally, the 'typical' fraudster will work in the finance-function or a finance related-role (32 per cent), often for more than 10 years (33 per cent) and usually in a senior management role or board role (in aggregate 53 per cent).
Company board members and those working within the chief executive or managing director's offices are increasingly committing more fraud. Globally board members commit nearly one fifth of fraud – an increase from 11 per cent in 2007 to 18 per cent in 2011 - while those in CEO or MD's offices account for an increase from 11 per cent in 2007 to 26 per cent across the four-year period.
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