GFC may have doubled business fraud cases

THE value of fraud detected more than doubled in the second half of last year, possibly as a result of the global financial crisis.

The latest Fraud Barometer released by business services firm KPMG shows there were 81 large fraud cases before courts in the six months to December 31, worth $217.9 million in total.

That compared to 69 cases in the first six months of 2009, worth a total of $100.1 million.

“The global financial crisis provided ideal conditions for fraudsters looking for extra money, as well as helping to uncover hidden fraud after corporate belts were tightened,” KPMG’s national head of forensic Gary Gill said in statement.

“We saw roughly the same number of fraud cases appear in court in the second half of 2009 but, significantly, a doubling in the value of the cases.”

Banks remain the prime target of fraud, with about one third of cases before courts involving financial institutions.

The perpetrators are overwhelmingly people inside the targeted organisations, with rank and file employees accounting for almost 30 of the frauds detected in the six months to December.

Fraud perpetrated by managers accounted for 57 per cent of the total value of the fraud detected.

KPMG says the main threat to organisations remains fraud instigated by their own managers and staff.

Accounting fraud, where accounting procedures are manipulated or controlled to divert funds, was the most common form of fraud.

The majority of fraud cases detected in the second half of 2009 occurred in NSW and Queensland, while fraud in NSW accounted for over half the value of total cases.

Of course, inadequate procedures and systems open the door to fraudsters and their actions do cause the failure of many companies and businesses.

If you have concerns about the state of your business, call Liquidation Direct for free and confidential advice, 24 hours a day, every day on 1300 100 285.

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