Women account for 17 per cent of corporate frauds: KPMG Survey

Though men remain the main perpetrators of corporate frauds globally, the number of woman 'fraudsters' is slowly increasing, reveals a global profile corporate fraudster by tax, audit and risk management firm KPMG.

The report, which profiled 750 persons involved in frauds committed between March 2013 and August 2015, says the proportion of women involved in such frauds has increased to 17 per cent from 13 per cent in 2010. All these frauds were investigated by KPMG.

As many as 68 per cent of perpetrators globally, and 59 per cent of fraudsters in India, fall between the ages of 36 and 55. Forty five per cent of women fraudsters fall in the 36-45 age group.

In India, 32 per cent of the culprits are in the age group of 26-35 (14 per cent globally), indicating that Indian fraudsters are younger, compared with their global counterparts. Of the 750 fraudsters profiled in the report, 56 are from India.

The report reveals that "frauds are almost twice as likely to be perpetrated in groups as in solitude. This is partly because fraudsters need to collude to circumvent controls. Larger groups (say, five or more people) tend to do more harm financially than single fraudsters or small groups".

Groups of fraudsters very often comprise people both inside and outside the organisation. As many as 61 per cent of colluders are either non-employees, or are employees who work with people who are not. Some of them are former employees. This is a dominant trend in India, where 77 per cent of the colluder groups comprised outsiders (20 per cent were purely external while 57 per cent were a combination of the two, and only 23 per cent of colluders were purely internal).

According to the report, 65 per cent of fraudsters are employees and 21 per cent are former employees. Among fraudsters who were employees, 38 per cent worked with the victim organisation for more than six years. In India, however, 73 per cent of fraudsters are employed by the victim organisation.

Profile of the fraudsters

The findings of the report suggest that mid- to top-level employees are more likely to be involved in corporate frauds than junior staff. Of the 750 profiled by KPMG, 34 per cent of fraudsters were executives or non-executive directors, 32 per cent were managers and 20 per cent, staff members.

In India, 23 per cent of the fraudsters surveyed were executives or non-executives, 63 per cent were at a manager and staff level.

This is consistent with the trend of perpetrators being young in India.

Globally, 42 per cent of female perpetrators are staff members (down from 46 per cent in 2010), 38 per cent are managers (up from 28 per cent in 2010) and 13 per cent are executives.

Nature of frauds

Misappropriation of assets (embezzlement and procurement fraud) was the most prevalent form of fraud, accounting for 47 per cent of them globally and 43 per cent in India. Globally, the second most prevalent is fraudulent financial reporting (22 per cent), while in India, revenue or assets gained by fraudulent activity occupied the second position (30 per cent), with fraudulent financial reporting at third place (20 per cent).

The report says that cyber fraud, an important form of technology-based fraud, is emerging as a growing threat and many organisations are aware of the issue but seem to be doing little about it.

"Resume fraud or application fraud is a significant and growing trend observed in India. Primary areas of discrepancies include education certifications, addresses and past experience," observed the report.

As many as 44 per cent per cent of fraudsters were detected as a result of a tip, complaint, or a formal whistle-blowing hotline. In India, 59 per cent cases were detected a tip, complaint, or a formal whistle-blowing hotline. As many as 25 per cent cases in India were detected as a result of a management review.