More cyber crimes over next 2 years: Deloitte

Survey finds SMEs show lack of commitment to mitigate fraud

Indian firms believe that incidents of fraud will increase in the next two years, a survey has found. But big companies are still unprepared to tackle cyber crime, while budget comes in the way of small and medium companies while dealing with such cases.

Multinational corporations in the country continue to focus on well-known frauds even as the business landscape exposes them to new fraud and non-compliance risks such as cyber crime, social media, and anti-competitive behaviour, Deloitte’s India Fraud Survey stated on Wednesday.

At the same time, small and medium enterprises show a lack of commitment to mitigate fraud due to reasons like inadequate budget and resource allocation and burden of complying with anti-fraud regulations.

“Multinational organisations appear to be primarily focused in preventing known frauds such as bribery and corruption, diversion/theft of funds and vendor favouritism, while ignoring the new threats,” it said. According to the survey, 70% of the large companies and 65% of the small and medium firms believe that incidents of fraud will increase in the next two years.

The large firms believe diminishing ethical values (38%), lack of efficient systems (37%), inadequate due diligence (37%), and unrealistic goals linked to monetary compensation (37%) are the main reasons contributing to fraud. Vendor favouritism (42%), diversion/theft of funds (33%), and bribery and corruption (30%) were the top fraud incidents experienced by such organisations.

For small and medium companies, it is diminishing ethical values (68%), limited or lack of segregation of duties (68%), and limited employee education on fraud (60%). These companies believe junior and middle management employees are the most likely to commit fraud.

“While we observe an increased adoption of automation and continuous monitoring as part of fraud risk management, it appears that these initiatives may be unable to detect new and emerging frauds,” said Rohit Mahajan, APAC Leader, Partner and Head (Forensic — Financial Advisory) of Deloitte India.

DH News Service

*About 70% of corporates and 65% of small and medium firms say incidents of fraud will increase in next 2 years
*Procurement (35%) and vendor selection (25%) were considered  functions most vulnerable to fraud risks
*Corporates believe junior- and middle-management employees most likely to commit fraud