India leads South Asia in occupational frauds

Enterprises that operate in 23 different verticals around 125 geographies have lost $7 billion in 2,690 different real scenario incid­ents of occupational frau­ds, said 2018 global fraud study, released by the Texas-based Association of Certified Fraud Examiners on Thursday.

India accounted for as ma­ny as 72 frauds (the next highest is Pakistan with 13 cases) out of the 96 cases re­ported from Southern Asia. The single largest occupational fraud scheme reported from the region was corruption at 62 per cent.

Other frauds were ar­o­und non-cash (20 per cent), billing (13 per cent), expense reimbursements (13 per cent), skimming (12 per cent), financial sta­tement fraud (10 per cent) and others.

Internal control weaknesses were responsible for nearly half of these (2,690) frauds. Losses caused by men were 75 per cent larger than losses caused by wo­men. Some 22 per cent of these cases caused losses of $1million and above.

In 53 per cent of these cases, firms could not recover any of their losses, 15 per cent recovered all losses while the rest could only make partial recovery of assets/values lost in the fraud attacks, reports the study.

According to the report, tip-offs by employees were the most common initial de­tection method (53 per cent), while internal audits and management reviews accounted for 13 per cent and 10 per cent detections.

Surveillance and monitoring proved to be close to futile with its success falling to single digit of 4 per cent in the region.

Interestingly, over the pa­st 10 years, occupational fraud referrals to prosecution declined to 16 per cent on account of fear of bad publicity. Fraudsters who had been with their company longer stole more. For instance, people with 5-year tenure stole $200,000 and people with less than 5 years $100,000. Median du­ration of a fraud scheme was 16 months.

In most cases perpetrat­or was manager (46 per ce­nt), followed by employees (31 per cent) and owner/ executive (19 per cent), revealed the report.

China accounted for 49 cases and Australia 38, cla­iming the first two positions in the Asia Pacific region that reported 220 frauds.

In the forward of the report Bruce Dorris, president & CEO, Association of Certified Fraud Examiners, recognised that there was a fundamental flaw in how global organisations were attempting to prevent, detect, and investigate fraud.

Southern Asia reported a median loss of $100,000, Asia Pacific $236,000, US $108,000, M-E and North Africa $200,000, we­stern Europe & Canada $200,000 each, eastern Eu­rope and Western/Central Asia a median loss of $150,000.