Fraud is increasingly being committed by senior managers as red flags are being raised and warning signs are being ignored a KPMG research has revealed. Close to 20% of all workplace fraud the company bosses were the ones at fault, compared to only 11% in 2007 per analysis of 348 crimes between January 2008 and December 2010 in 69 countries.
Criminal activity among chief executives and managing directors increased much more sharply to over 26% over the same four year period between 2007 and 2011. KPMG’s EMA forensic investigations network head Richard Powell said previous research proved that corporate fraudsters are for the most part male, between 36 and 45.
What was not known until now was how much the temptation had infiltrated both the executive management and board throughout the world. The report Who is the Typical Fraudster found that many work in finance (32%) and have experience of more than ten years, with 53% on the board or in senior management.
The reason is that the senior employees have the authority to override controls and checks and have a personal trust built up and research showed that this group usually commits embezzlement and procurement with those two crimes together representing over 50% of the 350 total cases. The UK had an even higher proportion of fraudsters who had been with their employer for more that ten years (57%) with over 50% in board roles or senior management.
The red flags that warn about these frauds like – an employee that never takes a vacation, secretive or does not provide information, leads an excessive lifestyle – have been missed or are being ignored most particularly since the start of the recent credit crunch. Good management control procedures need to be adhered to and there needs to be checks and balances in place at all times.