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|Findings indicate that fraud affects more than one in four companies in Singapore
Corporate fraud in Singapore is on the rise. Released today, the new KPMG-SMU Singapore
Fraud Survey 2014 report suggests that 29 percent of the survey respondents experienced fraud
incident within their organisation over the past two years, up from 22 percent in the 2011 survey.
For the first time, the survey was carried out in conjunction with Singapore Management University.
Internal fraud constituted 75 percent of fraud this year, up from 64 percent in 2011. This was also
the top concern in KPMG’s previous survey report in 2011. More than half (53 percent) of
respondents identified that a combination of weak or over-ridden internal controls was the leading
cause of fraud.
The survey also found that employees formed the greatest proportion of perpetrators, jumping from
47 percent to 58 percent in this time period. Fraud incidents reported in 2014 involving board
members and senior management officers remained unchanged from 2011 at 17 percent.
Bob Yap, Head of Advisory at KPMG in Singapore said: “The increase in internal fraud since 2011
suggests that while many companies in Singapore already have anti-fraud controls in place, these
controls are often inadequate.”
He added: "With 58 percent of fraud being committed by employees, it is important to address this
risk by setting a strong tone from the top – an organisation’s board of directors plays a critical role
in the oversight of programmes to mitigate the risk of fraud and misconduct. The board, together
with its management, is responsible for setting a moral tone and ensuring institutional support for
ethical and responsible business practices at the highest levels of the organisation."
More can be done to address fraud risk
More than half of fraud incidents were first detected by employees or customers, which suggests
the importance of a people-focused approach to fraud risk management.
The survey also found that one in 10 respondents said that fraud incidents were first detected by
data analytics or other investigative procedures. In light of this finding, Mr Yap said: "As the power
and prevalence of data analytics increase, it is likely that the use of technological solutions to
identify fraud will continue to grow."
Professor Pang Yang Hoong, Dean, School of Accountancy at Singapore Management University
said: "Promoting an anti-fraud culture and having management lead by example sends out a
message that fraud will not be tolerated. Board members need to be encouraged to speak to
employees and customers to identify and discourage fraud."
The survey also revealed that while companies recognise the threat of fraud, they can do more to
implement anti-fraud measures.
Findings indicate that:
- 85 percent of respondents said fraud and ethics policies were communicated to the
employees, yet only 59 percent felt their employees were well informed of the risks of fraud.
- 78 percent of respondents said control measures were regularly reviewed for
effectiveness, but only 58 percent monitor fraud risk indicators to pre-empt fraudulent
- 91 percent of respondents were concerned about the conduct of third parties, but
only 41 percent communicated their fraud and ethics policies externally.
Citing the findings, Mr Yap said: "Organisations should periodically monitor the effectiveness of
anti-fraud policies across their organisation. Monitoring plans should encompass activities that are
tailored to the nature and degree of the risk involved, with higher-risk issues receiving priority
He added: "The best time to plan is before a fraud occurs, not afterwards. Preventive measures
are designed to help reduce the risk of fraud and misconduct occurring in the first place."
With just 20 percent of respondents being completely satisfied with how their organisations were
defending e-crime, more can be done to improve IT safeguards in terms of software, hardware or
The fast-evolving threats and the growing complexity of IT systems also adds to the unease
around employee behaviour and the risk of customer or business data being stolen, falsified or
Mr Yap commented: "E-crime is an emerging area of concern and tackling it is proving challenging
in the absence of in-depth understanding of how e-crime occurs and how it can be prevented. The
recent cyber attacks in Singapore clearly highlight the need for companies to develop a robust
defense system to protect itself from the threats of the cyber world.
Understanding the trends in external threats and using this insight to formulate policy and strategy
is critical to long-term incident prevention. Having strategic insight into cyber risks and
understanding the impact on an organisation’s core business is paramount."
He added: "Knowledge and awareness among end users is similarly critical. Returns from investing
in IT security tools are best provided by staff who understand their responsibilities for keeping their