>India Fraud Survey Report 2010 (KPMG)

With greed increasingly informing the thought process and the actions of a large number of persons, fraud has a bigger presence in our lives than ever before. Fraud, an intentional deception made for personal gains or to damage another individual, is a significant factor worldwide in today’s competitive world, and in entities irrespective of their size. Fraud is a major source of risk which can have disastrous effects on the finances of a company. It can cause irreversible and often irreparable damage to the image and reputation of a company. In recent times, with increase in awareness, companies have started focusing on pro-active risk management strategies. However, a lot remains to be done, especially having regard to the complexity of instruments and the speed of transactions.

India has had its share of frauds and their incidence has often significantly impacted investor confidence. In an atmosphere of doubt and disbelief financial statements are often viewed with scepticism. This has also led to erosion of confidence and reduced trust among participants in the financial system.

The KPMG India Survey Report 2010 is an effort to provide a clear picture of what really happens in corporates today. The findings are, to put it mildly, disquieting. The mistrust of employees towards their senior management is unmistakable. Despite this, control mechanisms are not in place in most organisations and hence, the need for risk mitigating strategies is unquestionable. It is time that India Inc. sits up and ends its tolerance of unethical behaviour, bribery and corruption. Managements of companies have not only to act ethically but also to intensify their efforts to protect their companies from fraud. They should develop pro-active risk management mechanisms that can anticipate, prevent, understand, detect and respond to fraud.

This report highlights the urgent need for action from managements of companies against fraud. Even a strong regulatory system cannot always prevent fraud. The key lies in management decisions and recommendations to establish formal control systems that can help prevent or at least deal with fraud. I am hopeful that this survey will not only enhance awareness but also persuade corporates to move faster on the road to fraud prevention and risk mitigation.

To read the full report: FRAUD SURVEY 2010