Nearly 56 per cent of the domestic companies do not have a response plan in place to deal with fraud, according to KPMG's India Fraud Survey 2006.
As per the survey, which was based on responses from 1,000 companies, a fraud response plan details how to handle a suspected fraud incident, manage the subsequent risk operations and deal with the specifics of the investigation.
This is a fairly high percentage given how companies are increasingly becoming vulnerable to corporate fraud.
About 39 per cent of the companies said that they had been affected by fraud in the past one year, with 12 per cent saying that they were not aware if they were.
For fraud detection, 27 per cent said that they had detected the fraud through internal audits with an equal number saying that it had been through third party audits.
In terms of highest risk, services such as banking, insurance, mutual funds and asset management are at the top of the list with 23 per cent of the people saying that they are most vulnerable to fraud. Next in line are the NBFC's and investment banks with 17 per cent respondents putting them in the high-risk category.
Adam Bates, global forensic chairman, KPMG, said, "With the boom in the financial sector and organisations facing different set of challenges, the risk faced by corporates has increased manifold." He added that there is a rising need to manage and mitigate the risk more effectively.
The good news however is that organisations are getting increasingly proactive in taking action in such cases. 43 per cent said that the person responsible had been fired with 23 per cent saying that the person had been allowed to resign.
In only 2 per cent of the cases no action was taken against the perpetrator of the fraud. Organisations have also put a process in place for anonymous reporting of fraud through emails etc, as well as more proactive steps such as conducting a background check at the time of hiring.Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group
