The
firm has analysed 360 cases in which its forensic department has
been involved and found that a third of cases involve more than 50
acts of fraud, while two thirds of fraudsters commit acts
undetected for between one and five years. One tenth of fraudsters
go undetected for more than six years.
The perpetrators of the crimes are most commonly long-serving,
trusted managers in the finance department. Most are employed for
six years or more when they commit their first act of fraud, and
are motivated by greed and the opportunity presented by their
position.
The consequences of single frauds can be devastating, according
to the research. The total loss is more than €1 million in 42% of
cases, it said.
"Companies clearly have a challenge on their hands," said Ken
Milliken, head of forensic for KPMG in Scotland. "Over 60% of
perpetrators are members of senior management, whose status in the
company makes it easier for them to bypass internal controls and
inflict greater damage on the company."
Aged between 36 and 55, the typical fraudster is male, operating
on his own and working in the finance department. He is a manager
whose activities are made possible by weak internal controls.
While management reviews caught 21% of instances, the most
common way in which companies found out about fraud was through
employees who had found out about the activity and informed the
company.
"Given the repeated and extended nature of most frauds,
companies need to work extremely hard to detect frauds earlier
through tighter internal controls, data analytical tools and more
widely publicised fraud reporting mechanisms," said Milliken.
"Recoveries of losses from fraud can take several years to be
completed," said Milliken. "Prevention, such as introducing ethics
and integrity measures at the top anagement level, is always a more
efficient and cost-effective means."
Companies are rarely open about having suffered from fraud. Two
thirds of the firms studied by KPMG issued partial information or
none at all about the attacks, and in most cases no public
authority such as the police were ever informed. Investigations, it
found, were almost always private and internal.
