The phenomenal success of Indian corporate houses has thrown across its own unique set of problems, with corporate level fraud being the main area of concern. Even though there have been initiatives to check this anomaly, a recent report by Ernst & Young reveals that levels of frauds in Indian companies have increased acutely in the past two years.The report, titled the ‘9th Global Fraud Survey, Fraud Risk in Emerging Markets’, states that 42 per cent of Indian companies believe that levels of fraud have increased in the last two years while globally only 27 per cent of the respondents felt the same. Further, about 14 per cent of Indian companies also admitted experiencing ‘‘significant’’ fraud in the last two years. However, Ernst & Young believes that the actual number may be higher due to various reasons including non-disclosure of fraud and non-discovery of significant frauds, among others.‘‘The growing focus on cross-border expansion, high levels of growth with internal processes not keeping pace and large number of new employees joining the organisation are making most companies vulnerable to greater fraud risk in recent times,’’ Ernst & Young, risk and business solutions national director Sunil Chandiramani said.The survey also highlights that 14 per cent of Indian organisations have made a decision not to invest in an emerging market as a result of a fraud risk assessment.Indian companies fear internal collusions with third parties as the greatest fraud risk with 36 per cent of the respondents believing so. This is followed by corruption and bribery with 29 per cent of the respsondents agreeing to it. However, only 14 per cent of the respondents considered financial statement fraud as the greatest fraud risk.Among factors deemed important for determining the success of an organisation’s approach to fraud prevention and detection, 70 per cent of the Indian respondents considered ‘internal controls’ and the ‘internal audit function’ as the most important factors.
