Friday, December 4, 2009

How to Avoid Being Defrauded

As if the recession hasn't presented us with enough business and financial worries, a new item has been added to the worry menu.

According to the 2009 PricewaterhouseCoopers' Economic Crime Survey, some 56 percent of companies surveyed have reported falling victim to white collar crime in the last year's survey period. This number reflects a 4 point increase over the last two years. Indeed, the figures are the highest in the last six years. There has been a 10 point increase since 2003.

It would appear that difficult economic times increase the incentive to commit fraud as a source of income. The end result is due, in part, to a greater vulnerability of many companies whose control systems have been weakened or even eliminated due to downsizing and cost-cutting. Fewer funds are being allocated for fraud detection, prevention systems and investigation. As a result, financial fraud is increasing both from within and outside organizations.

Certain sectors have suffered from fraud the worst in the last year including communication, financial services, insurance, hospitality and leisure. Asset misappropriation and accounting fraud were the most common types of fraud encountered by the companies surveyed.
As an end to the recession is not yet in sight according to many experts, it is felt that fraud may continue to increase. Certainly, as many companies are yet to take preventive measures, there are adequate opportunities for the talented white collar criminal.

Canadian judges have responded to this increase in fraud crime by handing down severe and harsh punishments for those found guilty. But, the number of crimes reported far exceeds those caught. Businesses would be well advised to keep their eyes open and their systems well protected.

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