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| One-third US execs expect rise in fraud and misconduct: KPMG |
| Press Trust of India / New York Aug 27, 2009, 16:01 IST |
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Amid the US government's trillion- dollar infusion into the economy to tackle the continuing downturn, nearly one-third of corporate executives expect fraud or misconduct to rise in their organisations, a survey by the audit and advisory firm KPMG LLP said.
According to the survey, as many as 32 per cent of the executives surveyed expect fraud or misconduct to rise in their firms in one of the three categories of financial reporting, asset misappropriation or as any other illegal act.
In addition, two-thirds of the respondents said combating fraud and misconduct may require improvements in the corporate internal control environments, the survey found.
It revealed that inadequate controls (66 per cent) and management override of controls (47 per cent) were viewed as the top enablers of fraud and misconduct.
Meanwhile, 71 per cent of the respondents said the potential loss of public trust was their top concern if fraud or misconduct were revealed in their firms.
"Despite some very high profile prosecutions and pledges of rigorous enforcement by various government watchdogs, one of US' most troubled economic periods has created a perfect storm of increased pressures, new opportunities and dangerous rationalisations to allow business fraud and misconduct to occur," KPMG national leader forensic Richard H Girgenti said.
"Our findings underscore that pressures to stem the tide of reduced earnings through these difficult economic times along with the availability of trillions of dollars infused by the government to stabilise the market could heighten the risk of fraud and misconduct," Girgenti added.
The KPMG study found that 65 per cent of the executives perceive fraudulent and illegal acts to be significant risks in their industries, eight per cent of the respondents said fraudulent financial reporting would increase, while 66 per cent said it would stay the same, it added.
While one-quarter of respondents expect asset misappropriation to rise, 60 per cent say it would stay the same. The survey added that 20 per cent of the executives surveyed believe other illegal or unethical acts will rise.
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