Video: Fraud, Bribery and Corruption Survey 2012 

For almost two decades, KPMG has been undertaking research in the growth and extent of fraud in corporate Australia and New Zealand. Over that time respondents have reported a rise in fraud to almost $373 million, despite enhanced risk mitigation procedures.


Given the high cost of fraud to public and private sector organisations in Australia and New Zealand, it is imperative to bring some clarity to a problem that tends to flourish in business cultures where transparency is poor.



Some key findings in this years' survey include:

 

• Forty-three percent of respondent firms experienced fraud during the survey period. A third of these respondents told us, that they believe they only detected about 40 percent of fraud which suggests that the $373 million in fraud reported by respondents is only part of the picture.
• The average fraud loss per organisation is now $3.08 million.
• The number of losses over $1 million is growing with 20 cases in 2012 survey – up from 11 cases in 2010.
• The typical fraudster tends to be male, men are three times more likely to commit a fraud than women, greed and personal financial pressure are the most common motivators.
• There is a significant increase in the number of perpetrators over the age of 55 and growing incidence of fraud committed by senior executives and company directors.
• For major frauds, the typical fraudster is likely to be a non-management employee of the organisation. However, external parties continue to be responsible for the majority of overall fraud by number of incidents and value for financial and non-financial services organisations.
• The 25 to 44 – year age bracket continues to be the most criminally inclined but our survey indicated that the over-55’s were increasingly involved in major frauds. This may reflect the changing demographic profile of Australia as the labour force participation for over-55’s increases.
• Collusive fraud is growing since 2010 – this has increased from 23 percent to 29 percent. The real problem with collusion is the time it takes to detect fraud - 665 days.
• Complacency and denial is alive and well – despite the millions lost to fraud only 15 percent of those surveyed agreed that fraud was a problem for their organisation.
• Strong internal controls and risk management uncovered the culprits – with an increase in the notification by employees an encouraging sign that internal reporting channels are becoming more effective.

Bribery and corruption
In our latest report we've also gleaned some insight into the problem of bribery and corruption.

Almost three quarters of respondents reported that their organisation has experienced behaviours that are defined as bribery or corruption.

The most common form is preferential treatment – the least tangible form of corruption. Passive management is a clear contributor. A top down approach to creating the right bribery and corruption framework is vital particularly for companies with operations outside of Australia and New Zealand in jurisdictions with strong anti-bribery legislation.

Fraud is fluid. It is critical for organisation to understand that their responses to fraud cannot remain static. Company frameworks must evolve as creatively as the crime evolves. We believe that our survey of fraud, bribery and corruption provides an invaluable perspective on the ever-changing fraud landscape and is essential reading for business leaders – we trust you will find it insightful.