Corporate fraud to rise in two years' time: India Inc

Corporate fraud in India will rise in two years' time, according toDeloitte'sIndiaFraudSurvey.

The survey the rise in fraud was down to diminishing ethical values in workplaces.

The Deloitte'sIndiaFraudSurvey spoke to309 top executives from large (domestic and multinational) companies, SMEs, besides working professionals.

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"Respondents continue to identify known frauds such as bribery and corruption, diversion/theft of funds and vendor favouritism (only large organisations) and conflict of interest (only SMEs) as topfraudschemes that their organisations had experienced in the last two years," Deloitte said.

Around 70 per cent top executives representing large corporates,54 per cent belonging to small and medium enterprises and 65 per cent of working professionals felt corporate fraud would increase in the next 24 months.

Interestingly, while concerns aroundfraudappear similar, the methods employed to deal withfraudrevealed vast differences in approach within firms, indicating thatfraudis complex and companies have a long way to go in mitigating it.

In the area offraudprevention, large organisations appeared to be focused on preventing only historically known frauds, and appeared inadequately prepared to tackle new frauds such as social media and anti-competitive behaviour.

About 43 per cent of respondents felt that investigations were commenced based on the severity of fraud, while 36 per cent said the fraudster was allowed to resign in lieu of pressing legal charges. Besides, 33 per cent saidfraudwas communicated to employees, the board and regulatory agencies.

Within SMEs, 48 per cent felt lack of commitment to tackle fraud, while 42 per cent sited inadequate budget and resource allocation to prevent such activity.

"SMEs are struggling to mitigate even well-known frauds such as bribery and corruption," DeloitteIndiaHead (Forensic - Financial Advisory) Rohit Mahajan said.

"Given the inherent limitations of these organisations, there is need for government intervention to help tackle fraud," he added.

Further, the survey found that a majority (56 per cent) of working professionals believed that primary responsibility to fightfraudremained with them.

Moreover, about 70 per cent said that their employers provided enough opportunities for them to share instances of unethical behaviour.

(WION with inputs from PTI)