Reports on Workplace Fraud
Reports on Workplace Fraud
Reports on Workplace Fraud
A number of studies have been completed to determine the factors impacting changes inthe level of workplace fraud. In recentyears, surveys and reports consistently communicate thatworkplace fraud is on the rise. As ethics and compliance enforcement increases, the risks associated with fraud can be mitigated. However, it's important to remember thecommitment toethics and compliance varies globally.
As companies look to reduce costs by expanding overseas, it's important to consider the risks organizations will face by making the move.
Fraudulent Findings
The 2009/2010 Annual Global Fraud Report published by Kroll, along with the Economist Intelligence Unit also concluded an increase in workplace fraud levels. Based on the responses gathered from the study:
"The economic crisis in isolation has raised some fraud risks. 30% of survey respondents say that the global financial crisis has increased the levels of fraud at their organizations, compared with just 5% who saw a decline. Lower profits heighten some risks. 1 in 6 companies are seeing greater vulnerability from reducing internal controls to save money, 1 in 7 from pay restraint, and one in eight from reduced revenues overall."
Ernst and Young released their 11th Global Fraud Survey on May 19th. Many of the conclusions drawn from this report are similar to the findings in other studies published since the start of 2010.
Ernst and Young's Global Fraud Survey
Ernst and Young sought out Chief Financial Officers(CFO), as well as heads of legal, compliance and internal auditing departments to report on managing fraud, bribery and corruption risks. The respondents come from 36 countries, providing excellent insight into the risks and occurrences of fraud around the globe. In the press release for the study, Ernst and Young report:
"Despite the significant time and money already spent by many companies, our respondents' confidence in the effectiveness and level of adherence to internal compliance programs varied widely, both by geography and role."
Some of the conclusions generated from the survey are:
In the past year, fraudulent acts have increased globally, while they have decreased in the United States.
Senior level executives are increasingly concerned about personal liability as opposed to the financial hit taken by the company as a result of fraud.
Corporate boards in Latin America (95%), the Middle East and Africa (87%), Central and Eastern Europe (84%) and Australia (81%) are concerned about personal liability for company fraud, bribery or corruption.
72% of directors in North America are concerned about these risks.
More than half of the North American compliance officers see data security as the most significant compliance concern in the next 18 months, followed by concerns over unethical business conduct and health and safety.
1 out of 7 respondents has never formally conducted a fraud risk assessment.
Moving Forward
Understanding cultural differences and evaluating the level of risk in each country are considerations that must be made if a company wishes to reduce the risk of fraud. Overcoming the risks associated with expanding business operations overseas will continue to take time. In North America, there have been significant resources devoted to fighting workplace fraud. Companies are responsible for complying with a number of laws and regulations involving workplace fraud that have yet to be adopted on a global scale.
There have been cases of fraud in the USwhere control person liability has been used,holding supervisors or managers responsible for unethical employee actions. This remains inline with the growing personal concerns faced by CFOs, compliance professionals and auditors, as it's possible for them to be held accountable for fraudulent acts they were not aware of. Control person liability requires stricter controls and oversight within the workplace in order to ensure company policies and laws are abided by.
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