Investors, Insurance Fraud Still Rising – KPMG
Financial institutions continue to battle serious investment and insurance fraud committed by the top management and low level employees alike, according to KPMG Forensic’s fifth Fraud Barometer.
The Barometer shows there has been a rise in investor and insurance fraud, in contrast to Ernst & Young’s survey in Ireland which showed that instances of corporate fraud in the country have reduced by half in the last 12 months as fraud detection processes are introduced by businesses attempting to reduce financial loss. Just 16 percent of Irish businesses confirm that they have experienced incidence of serious fraud in comparison to more that 30 percent surveyed in 2010.
KPMG’s six-monthly analysis of reported frauds over $100,000 before Australian criminal courts to June 2011 shows that financial institutions continued to be targeted.
The findings revealed that the management continue to do more damage by fraud than lower level employees.
“Management stole on average $3.4 million per fraud, while employees stole on average $1.5 million. This remains consistent with the long term ratio throughout the history of the Barometer that losses from fraud by management are approximately three times greater in value than those by non-management,” noted KPMG.
Other key findings of the survey showed that the number of serious fraud cases fell (67 to 50 from the previous half). However the average value of fraud increased from $1.73 million to $1.82 million.
In addition, fraud by management is the biggest threat with an average fraud of $3.4 million, said KPMG.
“A worrying incidence of investor fraud is up from $22 million to $32 million, and two thirds of frauds against financial institutions involved insurance fraud and there were five case of large insurance fraud – the highest number in 3 years,” according to KPMG.