TT Epaper
The Telegraph
TT Photogallery
 
IN TODAY'S PAPER
WEEKLY FEATURES
CITIES AND REGIONS
ARCHIVES
Since 1st March, 1999
 
THE TELEGRAPH
 
 
CIMA Gallary

Frauds take a toll on local firms

Mumbai, Nov. 28: Companies in India are the biggest victims of fraud — outside Africa.

The chilling warning was issued in the Global Fraud Report released today by Kroll Advisory Solutions, a global leader in risk mitigation and response.

The report said 68 per cent of the Indian companies it surveyed were affected by frauds. And that’s not all: Indian companies suffered a revenue loss of around 1.2 per cent as a result of frauds, far above the global average of 0.9 per cent.

The theft of physical assets or stock is the most frequent area of fraud reported this year at 27 per cent. Last year, corruption and bribery were the top reported fraud in India. This year, it is down to 20 per cent of all reported frauds.

Information theft was in the second place on India’s totem pole for frauds at 23 per cent followed by internal financial fraud or theft at 22 per cent. Vendor, supplier or procurement fraud also remained one of the most widespread malaise affecting Indian firms.

The findings are from a study commissioned by Kroll of more than 800 senior executives worldwide, including 60 in India.

Reshmi Khurana, head of Kroll Advisory Solutions in India, said the country had a challenging environment when it came to frauds even though the situation had shown some improvement. In 2011, 84 per cent of Indian companies were affected by fraud.

Further, eight of the 10 frauds covered in the survey, were more widespread in India than they were globally. Internal financial frauds in India were far above the global average of 12 per cent.

The study also found out that more firms reported employees and vendors as the key perpetrators of fraud. While more than 30 per cent of the companies said junior employees perpetrated fraud, 20 per cent blamed vendors and suppliers.

“Our experience on-the-ground suggests that Indian companies and international firms operating in India are as vulnerable to fraud as ever, with procurement-related fraud being the most common. Companies must continue to develop strong and well-organised internal control systems so they can detect and address fraud when it arises,” she added.

According to the report, the threat of frauds is greater if there is higher IT complexity and high staff attrition.

The report said the most striking result of this year’s survey was that there had been a notable decline in global fraud, which had dropped to 61 per cent from 75 per cent last year. However, there were some trouble spots: manufacturing experienced a substantial jump in the number of firms suffering from fraud, going from 74 per cent to 87 per cent worldwide.

 
 
" "