NEW YORK – Fraud is no longer being kept under wraps. According to a new survey by U.S. audit, tax and advisory firm KPMG LLP, more companies are working to uncover fraud and take action against those who commit fraud. Today some 75% of companies report they have uncovered fraud in their organizations compared to 62% in 1998. The 2003 survey shows a jump in internal controls, from 51% to 77% as the chief means for detecting fraud; followed by internal audit, rising from 43% to 65%. Despite heightened awareness and broader implementation of fraud detection controls – which include everything from hotlines so employees can report fraud to other whistle-blower, training and additional anti-fraud programs – 22% of executives still said they do not plan to implement new controls, even though many companies are still evaluating their internal controls as required by Sarbanes-Oxley. "The good news is that more and more companies are taking affirmative steps to prevent and detect fraud within their organizations," Richard H. Girgenti, partner in charge of KPMG's Forensic practice. In fact, the KPMG survey found that 64% of companies took legal action by bringing civil or criminal charges against the culprits, compared with just 37% five years ago; and 64% notified a regulatory or law enforcement agency after finding fraud, compared with 34% responding to the previous survey. Despite the increase in fraud, 43% of corporate and government executives are predicting a decrease in fraud incidents in the next 12 months, with just 7% expecting an increase. "This statistic suggests that there is optimism that current anti-fraud measures will be effective. However, it also raises some concerns," said Girgenti. "Companies may be lulled into thinking that they now have a handle on the problem. In reality, fraud and misconduct are pervasive and insidious problems that require companies to maintain continuous vigilance in assessing and improving their controls and programs to detect, prevent and investigate its occurrence."

Continue Reading for Free

Register and gain access to:

  • Breaking credit union news and analysis, on-site and via our newsletters and custom alerts.
  • Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders.
  • Educational webcasts, white papers, and ebooks from industry thought leaders.
  • Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, and

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.