profile of a fraudster by kmpg (presentation)

Profile of a

Fraudster 2011

Press Conference, Zurich

June 15, 2011

1© 2011 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG

International Cooperative («KPMG International»), a Swiss legal entity. All rights reserved. The KPMG name, logo and «cutting through complexity» are registered trademarks or trademarks of KPMG

International.

Agenda

9.00 Andreas HammerHead of Public Relations & Public Affairs, KPMG Switzerland

9.05 Anne van HeerdenHead of Risk & Compliance and Head of Forensic, KPMG Switzerland

• How does the typical Fraudster look like?Presentation of the world-wide Study: «Profile of a Fraudster 2011»

9.30 Prof. Dr. Peter LeibfriedGeschäftsführender Direktor des Instituts für Accounting, Controlling undAuditing (HSG)

Mag. rer. soc. oec Alexander SchuchterInstitut für Accounting, Controlling und Auditing (HSG)

• «Forschungsgeschpräche mit rechtskräftig verurteilten Wirtschaftsdelinquenten»

10.00 John EdererHead of Corporate Client Forensic Services, KPMG Switzerland

• «Fraud Risk Management Prevention is better than a cure! »

10.20 Q&A

10.30 End

Profile of a

Fraudster 2011

Anne van Heerden,

Partner, Head of Risk and Compliance, Head of Forensic,

KPMG Switzerland



International.

Content

• Survey Methodology

• The «Fraud Triangle»

• Who is the typical Fraudster

• Detection of the Fraudster

• Size of the Crime

• Warning Signs

• Emerging Trends



International.

Survey Methodology I

KPMG gathered data and details from fraud investigations (from January 2008

through December 2010), in:

• Europe, Middle East and Africa (EMA)

• the Americas and

• Asia Pacific

348 cases from 69 countries

Only «white collar» crimes with a clear perpetrator



International.

Survey Methodology II

Frauds investigations included in this survey comprise:

• material misstatement of financial results

• theft of cash and/or other assets and

• abuse of expenses

The survey covers:

• fraudster profiles

• more common types of fraud

• conditions that tend to enable fraud

• typical follow-up actions by organizations impacted by fraud



International.

The Fraud Triangle

What do we understand by the term fraud?

• «All those activities involving dishonesty and deception that can drain value from a

business, directly or indirectly, whether or not there is personal benefit to the

fraudster.»

From a theoretical point of view there are three important drivers for committing fraud.

Rationalisation

OpportunityMotive



International.

The Elements of the Fraud Triangle

Motive Opportunity Rationalization

The offender„s impulse to

commit fraud.

The situation that enables

fraud to occur.

The mindset of the fraudster

that justifies them to commit

fraud.

Financial pressure

resulting from excessive

lifestyle;

Gap between the financial

remuneration earned and the

responsability held by

individual;

Pressure to meet financial

targets.

Weaknesses in the

internal controls,

Trust / confidence in

certain employees,

Dominate position.

The fraudsters convince

themselves that they are

owed extra remuneration by

the employer;

Not enough appreciation,

regarding the person, or the

professional activity.



International.

Who is the typical Fraudster?

Individual Profile

• Age: The typical fraudster is aged between 36 and 45 (70%), as per 2011

survey, which is similar to the 2007 results.

• Gender: Men were found to be more likely perpetrators. Women in the

Americas and Asia pacific are almost three times more likely to be

involved in fraud than in EMA.

This might be due to fewer women in senior positions in «old

Europe» and Africa.

• Function/

Position: Finance function or in a finance-related role, in a senior

management position

• Time: Employed by the company for more than ten years

• Collusion: Works in collusion with another perpetrator



International.


Where the fraudster works

Senior Management remain the most likely fraudster.

Most people involved in committing fraud work in the finance function.

11%

14%

26%

49%

18%

18%

29%

35%

Board Member

Staff

Management

Senior Management

2011 Survey

2007 Survey



International.

Where the fraudster works

2%

5%

3%

2%

9%

32%

11%

36%

0%

1%

1%

7%

8%

25%

26%

32%

Legal

Back Office

Research and development

Board Level

Procurement

Operations / Sales

CEO

Finance

2011 Survey

2007 Survey



International.


Time at the organization

The survey shows an increase in the detection of fraud among longer-term employees.

60% of the fraudster worked at the company for more than five years.

4%

9%

36%

29%

22%

1%

10%

29%

27%

33%

Less than 1 year

1 -2 year

3 - 5 year

6 - 10 years

More than 10 years

2011 Survey

2007 Survey



International.


Internal Control

Weak internal controls have become more important compared to 2007.

15%

36%

49%

11%

15%

74%

Collusion to circumvent good controls

Reckless dishonesty regardless of controls

Weak internal controls exploited

2011 Survey

2007 Survey



International.

The Swiss Fraudster

17 out of the 348 cases were from the Swiss Firm.

As the global average the typical swiss fraudster is:

• Male, aged between 36 and 55,

• working in the finance function or in a finance-related role,

• in a senior management position,

• employed by the company for more than five years.



International.

The Swiss Fraudster

Collusion

• Acted alone in 60% of the cases, exploiting in 70% of the cases the weak internal

controls.

34%

66%

42%58%

41%59%60%

40%

Alone With others

Americas

AsiaPac

EMA

Swiss



International.

The Swiss Fraudster

Motivation

• Misappropriation of assets is the most important fraud in Switzerland (59%), above

the global average of 43%.

• Globally, fraudulent financial reporting, raises concerns about the pressures placed

on management to achieve targets, while in Switzerland personal gain was the

most common fraud motivation.

6%

59%

12% 12% 11%

Type of Fraud

Fraudulent reporting

Misappropriation of assets

Revenue/assets gain due to fraudulent actsExpenses/Liabilities incured for fraudulent actOther

17%

65%

12%6%

Motivation

Meet targets / hide losses

Personal Financial Gain

Greed

unknow



International.

Detection of the Fraudster

Many frauds continue to be exposed by formal or informal whistleblowing

mechanisms,

One in seven frauds are discovered by chance. This puts question marks over

the effectiveness of controls and management review at detecting and preventing

fraud. (In 2007, 8% of frauds were discovered by accident, rising to 13% in 2011),

Companies seem to depend increasingly on the good consciences of staff / third

parties, or on accidental discovery, to identify fraud.

Globally, there are moves to create more formal frameworks to promote

whistleblowing In the US the Dodd-Frank Act (2010), in the UK the Public Interest

Disclosure Act. In Switzerland there is legislation scheduled to be debated in

parlament to protect whistleblowers.



International.

Warning signs

Red Flags – What do we understand by the term Red Flag?

• «A red flag is an event or set of circumstances that ought to alert an entity to the possible presence of fraud risk»

Companies are failing to read and to act quickly on the warning signs.

Ignored red flags are a license for perpetrators to carry on operating and a missed opportunity for the business to detect or prevent fraud and to possibly reduce losses and associated costs.

24%

21%

55%

6%

50%

44%

Prior red flag acted on

Prior red flag not acted on

No prior red flag

Red Flag identified and resulting actions taken

2011 Survey

2007 Survey



International.

Emerging trends I

Switzerland

• Family office in Switzerland are becoming targets for fraudster. perpetrators tend to

be employees and outside agents such as investment advisers rather than family

members.

Asia pacific

• To overcome cultural and language barriers, there is, a tendency to staff

subsidiaries with local people rather than with trusted and experienced employees

from the home markets. This allows for gaps in controls and means that fraud can

go undetected for prolonged periods, leading to high losses.



International.

Emerging trends II

India

• Companies are too focused on the front end [growing the business] rather than the

back end [the support functions] so red flags get ignored or treated as one-offs.

When frauds blow up, it's typically several years down the line, when the value of

the deception has multiplied and all the warning signs have been missed.

Central and Eastern Europe (CEE)

• Many multinational companies have tended to transfer trusted expatriate

employees from the parent company into key financial positions at their

subsidiaries in the region, to provide not only the necessary experience, but also to

«police» the subsidiary from within the finance function. They act as

whistleblowers.



International.

Emerging trends III

US

• Detection of fraud involving collusion with outside parties has increased

significantly, this can by attributes to anti bribery and corruption initiatives as the

Foreign Corrupt Practices Act (FCPA) and other task forces designed to clamp

down on misconduct.

Seite 21

Prof. Dr. Peter Leibfried, MBA, CPA

Mag. Alexander Schuchter, CINA

UNIVERSITÄT ST. GALLEN (HSG)

Institut für Accounting, Controlling und Auditing

Rosenbergstrasse 52, 9000 St. Gallen

Tel +41 71 224 74 10, Fax +41 71 224 74 23

[email protected]

[email protected]

Zürich, 15. Juni 2011

Forschungsgespräche mit rechtskräftig

verurteilten Wirtschaftsdelinquenten

Seite 22

Untersuchungsrahmen

Dissertation an der Universität St. Gallen (HSG)

Referent Prof. Dr. Peter Leibfried, MBA, CPA: Geschäftsführender Direktor Institut für

Accounting, Controlling und Auditing (ACA-HSG)

Korreferent Prof. Dr. Urs Jäger: Ehem. geschäftsführender Direktor am Center for

Leadership and Values in Society (CLVS-HSG); nun Visiting Professor an der INCAE

Business School in Costa Rica

Doktorand Mag. Alexander Schuchter, CINA: Übungsleiter und Mittelbau-Repräsentant

der School of Management (SoM-HSG)

Wer könnte zu den tatauslösenden Faktoren und tatverhindernden Massnahmen

eine wirklichkeitsnähere Antwort liefern als die Wirtschaftsstraftäter selbst?

Zeitlicher Horizont: Seit 2006 Recherchearbeiten, seit Ende 2009 Erhebungsphase,

seit Sommer 2010 Abschluss der persönlichen (12) und telefonischen (1) Interviews mit

rechtskräftig verurteilten Wirtschaftsstraftätern in der Schweiz (9) und in Österreich (4)

Untersuchung beschränkt sich auf die Bereiche: Falschbilanzierung, Korruption &

Bestechung, Unterschlagung, Veruntreuung & Betrug, vorwiegend qualitativ

[email protected]

[email protected]

Seite 23

Forschungsdesign

Erhebung

Zugang zum Forschungsfeld hat sich als Herausforderung bestätigt (Daten-

gewinnung durch Interviews mit verurteilten Wirtschaftsstraftätern mit Deliktsummen

im Millionenbereich; strenger Datenschutz, Themenernsthaftigkeit etc.)

Befragte: Vom ehemaligen Geschäftsführer, CEO, Accountant in den oberen

Führungsebenen und Aufsichtsorgan zum Verurteilten und Insasse einer Haftanstalt

Erwähnenswert: Überraschend offene Haltung während der Gespräche, überaus

sympathische und freundliche Personen

Aufbereitung

12 der 13 Interviews sind zu verwenden und wurden nach der Tonbandaufnahme (mit

Einverständnis der Befragten) in die hochdeutsche Sprache transkribiert

Gesamtgesprächs- (Ø 81; 1„060 Min.) vs. Aufnahmedauer (Ø 31; 405 Min.)

Auswertung und Interpretation

1. Verfahren: Manifestes: Qualitative Inhaltsanalyse (computergestütztes GABEK®)

2. Verfahren: Latentes: Feinstrukturanalyse (hermeneutische Interpretation)

Methoden- und Forschertriangulation Validität

Quelle: Vgl. Zelger/Oberprantacher (2002), Art. 27.

[email protected]

[email protected]

Seite 24

Schlussfolgerungen im Vorfeld I/III

Der typische Wirtschaftsstraftäter ist

unauffällig

zumeist männlich

eher extravertiert

noch unbescholten

überdurchschnittlich gebildet

risiko- und entscheidungsfreudig

stark karriere-, erfolgs- und publicityorientiert

sozial hervorragend in das Unternehmen eingebettet

gesellschaftlich hoch angesehen, geschätzt

seit ungefähr einem Jahrzehnt im Unternehmen (!)

Quellen: Vgl. Ragatz/Fremouw (2010), S. 379 ff.; Schuchter (2010), S. 80;

Bussmann/Salvenmoser (2006), S. 206 f.; Blickle et al. (2006), S. 220 ff.; Löw (2002), S. 58 ff.;

Weisburd/Waring/Chayet (2001), S. 73 ff.; Wheeler (1992), S. 113; Cressey (1953), S. 145 f.

…aus welcher Branche?

?

[email protected]

[email protected]

Seite 25

1. Häufig kongruente Persönlichkeitsmerkmale

2. Persönlichkeitseigenschaften entwickeln und verändern sich mit der Zeit

3. „Machiavellistische Intelligenz“ erschwert Untersuchung tatsächlicher Persönlichkeit

4. Auch wenn es gelingen sollte, alle Ausprägungen der Persönlichkeit eines Täters bei lang-

jährigen Unternehmensangestellten oder auch bei Bewerbern für eine offene Stelle nachzu-

weisen, ist es dennoch kein Beweis für ein zukünftiges, deliktisches Handeln

Quellen: Vgl. Blickle et al. (2006), S. 220 ff.; Collins/Schmidt

(1993), S. 295 ff.; Ones/Viswesvaran (2001), S. 31 ff.

Tab. 1: Persönlichkeit im Vergleich

Quelle: Vgl. Schuchter (2010), S. 80.

Schlussfolgerungen im Vorfeld II/III

[email protected]

[email protected]

Seite 26

Viele Unternehmen verletzen Gesetze in bestimmten Gebieten, jedoch nicht in anderen

Gebieten, obwohl das Personal dasselbe ist (wenn also allein Persönlichkeitsmerkmale für

das Auftreten von dolosen Handlungen in Unternehmen eine Rolle spielten, dann wäre

nicht zu erwarten, dass Personen in unterschiedlichen Situationen bestimmte Gesetze

unterschiedlich häufig verletzen) und

Viele Unternehmen verletzten über Jahrzehnte Gesetze, obwohl das Personal bereits

vollständig gewechselt hat (wenn die Persönlichkeit von Individuen das Auftreten von

dolosen Handlungen erklären könnte, dann wäre zu erwarten, dass bei Änderung des

Personals die Häufigkeit oder Art der Wirtschaftskriminalität wechselt)

Die These, dass Individuen mit bestimmten Persönlichkeitsmerkmalen eher

Wirtschaftsdelikte begehen, wird im Rahmen der Doktorarbeit abgelehnt

ANNAHME: Weniger Wirksamkeit: Prävention durch Personalrekrutierung

Mehr Wirksamkeit: Profunde Ursachenanalyse, um Prävention zu entwickeln

Schlussfolgerungen im Vorfeld III/III

Quellen: Vgl. Sutherland (1949), S. 259 ff.; Sutherland/Cressey

(1960), S. 135; Opp (1975), S. 111.

[email protected]

[email protected]

Seite 27

Theoretischer Bezugsrahmen

Die Untersuchung stützt

sich auf einen der wohl

bekanntesten

wissenschaftlichen

Erklärungsansätze der

Entstehungsgründe

doloser Handlungen von

Donald Ray Cressey

(Ursprung), einem

Pionier der

Wirtschaftskriminologie

Benötigt es immer alle

„Fraud Triangle“- bzw.

„Fraud Diamond“-

Elemente?

Abb. 1: Vom „Fraud Triangle” zum „Fraud Diamond”

Quellen: Vgl. Cressey (1950), S. 738 ff.; Cressey (1953)

S. 90 f.; Wolfe/Hermanson (2004), S. 38 ff.

[email protected]

[email protected]

Seite 28

„Boundless-Manager“ ohne Motiv

“He [the offender] did not consider, even while in prison, that his behavior was criminal.”

Quelle: „Independent Businessmen“ vgl. Cressey (1953), S. 102.

FAZIT: Einzig die „Gelegenheit“ ist eine conditio sine qua non

Quelle: Auswertung der

eigenen Untersuchung.

„Nein, es gab keinen Druck und nein,

eine innere Stimme hat es auch nicht

gegeben, weil ich mir eigentlich eines

wirklichen Unrechts in der Zeitspanne

nicht bewusst war.“

„Der Anreiz des Vorfalls war nicht ge-

geben, da gab es keinen. Es war nie

beabsichtigt, dass wir die Leute be-

trügen […]. Die Absicht einer Tat war

nicht da, deshalb waren es keine der

genannten Auslöser.“

unbewusst

Anreiz_keinen

Auslöser

Druck_keinen

Gew issen_rein

Innere_Stimme_keine

Ombudsstelle_extern

Abb. 2: Kausalnetzgrafik „unbewusst” „Transkribierter

Interviewtext“

[email protected]

[email protected]

Seite 29

Tatauslösende Faktoren

Sogwirkung der „Motivation“, aus welchem eine selbständige

Befreiung aus Sicht der Respondenten kaum mehr möglich scheint

Sog des Drucks

„Die Angst, dass das jemand entdeckt.“

„Ich wollte die Sache wieder regeln. Das war ein enormer Druck.“

„Wenn man dann in so einem Kreis drinnen ist, dann ist es auch noch

schwierig auszubrechen. Dann haben Sie pro Jahr zwei Wochen Herzklopfen, starkes,

wenn die Revisionsgesellschaft da ist und dann geht es wieder weiter, das ist schon so.“

„Ich setzte mir hohe Ziele […] Ein enormer Druck wird ausgeübt. Es geht nur um Zahlen

und Zielerreichung. Wie man sie macht, spielt keine Rolle.“

„Es war nur aus einer Drucksituation entstanden, weil das damalige Arbeitsklima wirklich

sehr gehässig war […].“

Anreiz als Fahrwasser

„Es ist immer getrieben von einer gewissen Gier. […] Der Anreiz ist immer materiell, also in

meinem Fall war es materialistisch. Ich habe dann auch ein bisschen die Relation verloren.“

„Anreiz, ja, über dem zu leben, wie man eigentlich leben konnte in meiner Stellung als

solches. Dann wurde es zu einem sportlichen Ereignis. Gelingt es mir, oder kommen die

jetzt drauf oder nicht.“

[email protected]

[email protected]

Seite 30

Buch (erscheint voraussichtlich Anfang 2012):

Titel: „Perspektiven verurteilter Wirtschaftsstraftäter – Erklärungsansatz der Entstehungs-

gründe von Wirtschaftskriminalität und deren Prävention in Unternehmen“

[email protected]

[email protected]

Bitte um Fragen und Anmerkungen

Prof. Dr. Peter Leibfried, MBA, CPA

Mag. Alexander Schuchter, CINA

UNIVERSITÄT ST. GALLEN (HSG)

Institut für Accounting, Controlling und Auditing

Rosenbergstrasse 52, 9000 St. Gallen

Tel +41 71 224 74 10, Fax +41 71 224 74 23

[email protected]

[email protected]

Fraud Risk Management

Prevention is better

than a cure!

John Ederer

Head Corporate Clients, Forensic Services

KPMG Switzerland



International.

The size of the problem

What do we understand by the term fraud?

• «All those activities involving dishonesty and deception that can drain value from a

business, directly or indirectly, whether or not there is personal benefit to the

fraudster.»

In numbers

• In Switzerland fraud losses are estimated at 2-4% of GNP – that would be at least

CHF 8 billion.



International.

The guiding message

The guiding message….

«If it seems too good to be true,

it usually is!»



International.

Rule of Thumb

According to the «20:20:60» Rule of Thumb

20% of all employees are dishonest

• Pre-employment-screening

• Fraud risk management (effective controls)

60%

20% of all employees are honest

• No special measures / actions necessary

60% of all employees are as honest as the circumstances

allow fraudulent activities and misconduct or not

• Fraud risk management

• Ethics and integrity management (code of conduct,

whistle blowing hotline, management as role model, tone

of the top)

• Know your employees

80%

20%

20%



International.

Fraud Risk factors

Misuse of merger

reserves

Improver valuation of other assets

Manipulation of transfer pricing

Misuse of inter company and

suspense accounts

Hidden contract

terms

Manipulation of joint ventures

False cash entries

Hidden pledges of cash deposits

Teeming and

lading or lapping

Standard costs manipulation

False ownership

status False

qualityFalse

quantity

False

valuation

Manipulation of rebates and discounts

Delaying or advancing expenses

Misrecording of capital items

Under or over accruals

False sales and

customers

Advancing or delaying revenue

Manipulation of rebates and discounts

Misrepresentation of credit status

Under or over provision for bad debtsOtherRevenue

Cash

Inventory

Expenses

This graphic contains illustrative examples and should not be considered as a complete list of fraud risk factors and not all of these examples

are necessarily applicable in all circumstances. Professional judgment is required in response to the specific circumstances.



International.

Managing Fraud I

Effective control starts with…..

Prevention:

• A Code of Conduct with a section on Fraud Risk Management must be

implemented and considered effective, with regular training held by most of the

company, and dedicated IT security measures ought to be implemented. Fraud risk

assessments should also be conducted on an annual basis.

Detection:

• Management review and basic Internal control mechanisms are rated as the most

effective means for detection. The role of whistle blowing is significant, but

unevenly spread across different regions and cultures.

Response:

• The majority of large companies have incident assessment and escalation

procedures, but few have a dedicated fraud response team.



International.

Managing Fraud II

Essential components

• Effective anti-fraud strategy

• Tasking key people to take ownership for fraud management

• Open minded - on specific fraud risks: not «It won„t happen here!», rather

«Why couldn„t it happen?»

• Know your fraud risks

• Be aware of key fraud indicators

• Increase awareness on what to do and actions to take

• Code of conduct, that is lived



International.

Do‘s and don‘ts I

Do’s

• Immediately ask for experienced professional assistance

• Keep it confidential to a small number of essential individuals

• Block electronic and physical access of suspects

• Withdraw powers of attorney of involved persons

• Preserve evidence and put it into a safe place

• Anticipate publicity and establish internal and external communication. One voice

only.



International.

Do‘s and don‘ts II

Don’ts

• Do not touch, save, back up nor shut down any PC/Laptop that may contain

evidence.

• Do not alert the suspect

• Do not let involved «targeted» employees touch the PC/Laptop anymore, not even

for «just shutting it down properly»

• Do not search for evidence yourself

• Do not fire the suspect before taking legal and tactical advice.



International.

Quick Wins

Check the fundamentals

• reconciliations are carried out independently & appropriately

• signatures are completed

• limits are applied

• segregation of duties is obeyed

• assets are appropriately valued & control

Trust and check

… but also have a healthy measure of mistrust!



International.

Red Flags

Examples of Red Flags

• Refusing to take a holiday (especially more than a few days )

• Persistent anomalies in behavior or attitude, e.g. a dominating style, not tolerating

questions

• Excessive generosity towards other staff / auditors

• Taking particular interest in certain elements of the organization's business

• Habitual gambling / expensive life style

• Conflicts of interest

• Missing files or incomplete documentation

• Complaints from suppliers, customers, staff or auditors



International.

And the Future? I

Will fraudulent actions increase?

• 66% of the questioned companies assumed that they will not fall victim to white

collar crime

• But: 73% informed us that they had already suffered from white-collar-crime in the

last three years!

The number of the cases may be constant, but more and more are coming to

light due to

• Increased consciousness

• Increased willingness to report fraud and misconduct

• More rigorous laws and guidelines

• Control & fraud risk systems



International.

And the Future? II

Based on the Survey results….

• There seems to be an increased failure to respond to Red Flags

• Due to the recession & consequent cost cutting there appears to be a reduction in

the effectiveness of internal controls (despite tightening legislation)

• In developing growth economies the front office sales are growing faster than the

back office infrastructure and this probably effects Swiss international companies

just as much as others

• We may be facing a growth in fraud discoveries in 2011/ 2012 if the Survey‟s three

year delay in ties back to the recession of 2008

Additional Information



International.

Red Flags I

Some Red Flags to look for:

Does this describe an area of your business? Yes No

There are difficult relationships and a possible lack of trust between the business and the

internal/external auditor.

Excessive secrecy about a function, its operations and its financial results. When

questions are asked, answers and supporting information are often stalled or withheld.

Some practices within a function do not appear straight-forward, and may even be illegal

or unethical.

Senior managers receive large bonuses linked to meeting targets.

There is excessive pressure on employees to tamper with results to meet analysts' high

expectations for the business.

Elsewhere in the industry, companies are struggling and sales and/or profits are declining.

Your business appears to buck the trend.

Complex/unusual payment methods; agreements between the business and certain

suppliers/customers. These may be set up in a deliberately opaque manner to hide their

true nature.



International.

Red Flags II

Some Red Flags to look for (cont.):

Does this describe an area of your business? Yes No

There are multiple banking arrangements rather than one clear provider ― a possible

attempt to reduce transparency over the business‟s finances.

High staff turnover within a function. Employees may be more likely to commit fraud in a

business with low morale and inconsistent oversight.

Where matters of financial judgment/accounting treatment are involved, the business

consistently pushes the limits/boundaries.

A division or department of the business is perceived as complex or unusually profitable,

thereby diverts the attention of management and the audit functions.

Increases in profitability fail to lead to increased cash flows.

A remote operation not effectively monitored by the head office.



International.

Size of the crime

In some fast growing economies where

there is a culture of not loosing face

or speaking up they tend to have higher

average losses,

Increased commercial pressures to

recover funds,

Direct correlation between the size of the

crime and attempts to recover the

loss.

Sub Region Average total losses

per fraud US$m

Asia and

Middle East

1.5

North

America

1.2

Australia and

New Zeland

1.1

Europe 1.0

Africa 0.9

South

America

0.8

India 0.7