A survey of Ernst & Young says fraud levels in India are considerably higher at 42 pc against global average of 27 pc
New Delhi: As India Inc steps up to expand in the global arena, it faces the risk of stumbling on frauds, the levels of which were far higher compared to global levels, according to international consulting firm Ernst and Young.
A survey by E&Y in emerging markets has revealed that fraud levels in India are considerably higher at 42 per cent than the global levels of 27 per cent.
“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 and Young national director, risk and business solutions, Sunil Chandiramani said.
The study said as many as 42 per cent of the Indian companies believe that internal collusion, corruption and bribery have skewed up fraud levels in India.
About 14 per cent of companies admitted experiencing ‘significant’ fraud in the last two years.
The survey said the actual number may be higher due to various reasons, including non-disclosure of fraud and non-discovery of significant frauds among others.
As many as 36 per cent of the responding companies considered internal collusion with third parties as the greatest fraud risk, followed by corruption and bribery, considered as a fraud threat by 29 per cent, it said, adding only 14 per cent of the respondents considered financial statement fraud as the greatest fraud risk.
Compared to 59 per cent of respondents globally, 24 per cent of in India viewed corporate security prevention and detection; corporate culture ethics; documented formal processes; legislation or raising employee awareness and training as important for determining success towards fraud prevention and detection, it said.
“Many organisations are still not considering appropriate fraud risks while designing their controls systems and procedures. Though robust internal controls remain the first line of defence against fraud, anti-fraud controls are not always integrated under an anti-fraud programme and monitored for compliance,” Chandiramani said.