Despite tough regulations aimed at improving corporate governance, financial fraud is still on the rise around the world, and most is still detected by chance, a study from auditing firm PriceWaterhouseCoopers (PwC) showed Tuesday, according to Reuters.
Globally, the number of companies that reported financial fraud increased 22 percent in the last two years, according to the PwC study, which conducted 3,634 interviews with corporate officers in 34 countries.
Of companies polled, 45 percent reported that they detected incidents of fraud, up from 37 percent who reported incidents in 2003. For the roughly one-third which said they could quantify the cost of the fraud, the total losses exceeded $2 billion, or an average of $1.7 million per company.
The survey, conducted in conjunction with Martin-Luther University in Germany, also showed:
– The most common methods of finding out about financial fraud were still accidental, like calls to hotlines or tips from whistle-blower employees.
– Fraud was detected by chance in more than a third of the cases, while internal audit detected the fraud 26 percent of the time.
– Larger companies were more likely to experience and detect fraud, but no company or industry, in regulated or unregulated sectors, was immune to financial fraud, the survey showed.
– Of those who committed the fraud in North America, 60 percent were employees of the defrauded company.
– Almost one-quarter of the perpetrators were senior managers–the very people required to sign off on financial statements.
– Nearly 80 percent of companies polled, said they did not consider it likely that they would suffer from financial fraud over the next five years.