Corporate India unprepared to handle fraud: KPMG Report

18 March 2008

New Delhi: India is perceived as a fraud haven with over 75 per cent of the respondents to the KPMG survey considering undetected fraud as their highest concern followed by inadequacy of anti-fraud measures and unethical employee behaviour.

The dual impact of two concerns rated high by respondents, unethical behaviour of employees and inadequacy of anti-fraud measures, leads to an environment where both inclination and opportunity co-exist.

This could mean that organisations in India that remain passive in their approach to deal with fraud may be a perfect breeding ground for fraud, suggests the findings of the latest KPMG report on fraud.

Re-enforcing the point, over 80 per cent of the respondents accept that fraud is a problem in the corporate environment in India, and another 70 per cent believe that fraud in India will increase over the next two years.

From KPMG's previous survey in 2006, there has been a rise of approximately 54 per cent in the number of fraud victims.

"With the increase in the number of business transactions combined with the lack of effective monitoring, frauds are a real time threat for most corporates in India," said Deepankar Sanwalka, head, forensic services, KPMG India. "It comes as a surprise that even the larger companies operating in India do not have adequate risk management strategies. Soon companies operating in the Indian marketplace shall be under greater pressure to implement better practices in corporate governance, corporate disclosure and risk management".