8 Nov 2010

Firms ignoring own detection systems at great cost - survey

12:09 pm on 8 November 2010

A sizeable minority of Australasian firms are ignoring their own fraud detection systems, costing them millions of dollars.

The biennial KPMG Fraud and Misconduct Survey found the total value of fraud rose 15% to $441 million among 200 firms and organisations in New Zealand and Australia in 2010.

KPMG says fraud is costing firms more, with the average value per firm doubling to $3 million in the past two years.

In nearly two thirds of cases, nothing was recovered.

It may be the tip of the iceberg, with the respondents saying only a third of frauds are being picked up.

While financial and insurance firms remain vulnerable to outside fraud, greedy employees are the main problem for businesses in other sectors.

The survey found the typical fraudster was a 38-year-old male employee who had been there five years.

Some firms are not helping themselves though - with 38% of them ignoring their own warning signs, or overlooking red flags.

Whistleblowers accounted for uncovering a fifth of fraud.