Fraud: Where the Perps Are
from
September/October 2006
by Ron Connaught
It’s not surprising that 60% of multinational companies think fraud is more likely to occur in their operations in emerging markets than in developed ones—an opinion that surfaces in Ernst & Young’s ninth global fraud survey. But here’s more of an eyebrow-raiser: 75% of the known cases of fraud over the past two years actually took place in those companies’ developed-country operations, according to the same survey.
One thing’s for sure. “If you don’t have anti-fraud policies, your chance of losses is predictably higher,” says Dale Kitchens, a partner in Ernst & Young’s fraud-investigation practice. Apparently that all-too-obvious advice is widely ignored—40% of the 600 surveyed companies don’t have such policies in place, a percentage that remains unchanged since the last survey, in 2003.
What is new is the principal motive cited for investigating allegations of fraud. In 2003 companies said they were primarily after wrongdoers; now they say they’re mostly trying to improve internal controls.
