Evaluating the fraud risk

THE recent charging of a CSBP executive over a $1.7 million fraud has served as a timely reminder of the risks posed by corporate fraud.

The high-profile cases that make the news are just the tip of the iceberg, with more than 7,000 cases of fraud reported to the WA Police in 2003.

The person charged with the CSBP fraud – Mark Wilkie, a supervisor with CSBP subsidiary Cockburn Shipping Services – fits the profile of a typical fraudster.

He was a long-standing employee at middle-management level. Mr Wilkie was arrested last week and charged with 101 counts of stealing, dating back to 1993.

KPMG forensic director Dean Newlan said the typical fraudster acted alone, was opportunistic with a simple modus operandi, identified internal control weaknesses and used false invoicing to try and cover their tracks.

Mr Newlan said a KPMG fraud survey found that the typical fraud was worth about $390,000.

The survey also found that managers were the greatest risk because they were responsible for the largest frauds.

Specifically, managers were responsible for 29 per cent of frauds by number but 51 per cent by value.

Other employees accounted for a larger number of frauds (44 per cent of the total) but just 16 per cent of the total value.

The balance was attributable to external parties, who were responsible for 27 per cent of fraud by number and 33 per cent by value.

Mr Newlan said the trends toward globalisation and increased personal mobility contributed to the problem of fraud.

The increase in educational standards was another driver.

He said the constant push for increased business efficiency was also part of the problem, as this could lead to a reduced focus on internal controls.

Another driver of fraud was the accessibility to gambling, both in traditional forms and online.


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