What the heck does a fraudster look like anyway?
A new report by KPMG International paints a striking picture about fraud and those who commit fraud.
Sit back, close your eyes, and imagine what you think a fraudster looks like. If you guessed that a fraudster looks like you and me, then you are right.
This report is based on analysis of 750 fraudsters around the world that were investigated by KPMG between May 2013 and August 2015.
It found that 65 percent of fraudsters worked for the very organization they swindled. The very same people you share your morning coffee talk with.
In fact, those who participated in fraud tended to be male between the ages of 36 and 55, working with the victim organization for more than six years, and holding an executive position in operations, finance or general management.
Now take a look around you in your place of work… you don’t want to be having that conversation about ‘he or she being the last person you’d expect to do something like this’.
According to the report, it would seem that ‘pack mentality’ is growing. Why commit fraud by yourself, when you can collude with others and cause more damage and gain more for you?
Fraudsters working together do more damage than single perpetrators. About 43 percent of frauds involving collusion cost firms over $1 million, nearly double the rate of fraudsters acting alone, according to the report.
It would appear that the KPMG report and ACFE’s Report to the Nations are speaking the same language.
The most-prevalent fraud surveyed is the misappropriation of assets at 47%, mainly embezzlement and procurement fraud. The second most-prevalent fraud was financial reporting at 22%.
Weak internal controls tend to be a contributing factor for 61% of fraudsters in this report, compared with 54% in 2013. In fact with weak internal controls, and with 44% of perpetrators having unlimited authority in their company and able to override what little controls there are, it’s no wonder fraud is taking place.
Now chew on this… 44 percent of fraudsters were busted as a result of a tip, complaint, or formal whistleblowing hotline.
Simply put, fraud is less likely to occur in companies where there are robust internal controls and monitoring.
What on Earth are you waiting for? That first fraud to happen? You may be kicking yourself after words.
Now is the time to get that that hotline in check!
[source]Global Profiles of the Fraudster: KPMG International Report[/source]