THE number of reported corporate crimes more than doubled in Western Australia in the second half of 2009 amid changing economic conditions and tighter control procedures.
THE number of reported corporate crimes more than doubled in Western Australia in the second half of 2009 amid changing economic conditions and tighter control procedures.
In the latest results of accounting firm KPMG’s ‘fraud barometer’, which tracks the level of frauds over $100,000 before the courts in Australia for the past year, there were 14 cases of fraud in WA in the six months to December 2009, totalling $8.6 million.
This is compared to six cases before the courts in the first half of last year, which totalled $4.1 million.
The eastern seaboard remains the country’s key target for fraud. NSW emerged as the hardest-hit state, suffering 26 cases of corporate crime, totalling $110 million.
Queensland experienced a significant number of large scam cases; two of the largest were a Ponzi scheme costing $10.5 million and a $13 million duty evasion case involving imported tobacco.
KPMG national head of forensic, Gary Gill, told WA Business News the barometer found Australia’s fraud value doubled in the past six months to almost $218 million, with little sign of the epidemic subsiding.
“The global financial crisis provided ideal conditions for fraudsters looking for extra money, as well as helping to uncover hidden fraud after corporate belts were tightened,” he said.
“While alarming, these results are not surprising as the large number of managers and employees facing fraud related charges can be directly linked to better fraud detection, following a tightening of internal controls as a result of the economic downturn.”
Mr Gill said the most common form of fraud involved employees overriding or manipulating accounting procedures and controls to divert funds for their own benefit.
A biannual Pricewaterhouse-Coopers survey of more than 3,000 organisations in 54 countries found that Australia experienced economic crime at a greater rate than the global average in the past year.
The survey found that 40 per cent of Australian companies reported at least one instance of corporate crime in the past 12 months, compared to 30 per cent of companies globally.
PwC partner, forensic services, Malcolm Shackell, said there was a demonstrable link between the financial turmoil experienced over the past two years and a rise in reports of corporate crime.
“With signs of improvement, the pressing issue facing organisations is whether the control weaknesses resulting in higher incidences of fraud will be plugged or whether gaps will remain with the potential to seriously impact organisations,” he said.
“I suspect for many businesses, especially those that did not have sound fraud control systems prior to the financial crisis, this is a clear and present danger.”
PwC found the removal of financial bonuses and the threat of redundancy encouraged staff to perpetrate fraud.
