Sanchia Temkin
9 July 2009
Johannesburg — A LARGE proportion of South African companies have experienced an increase in fraud detection rates since the start of the market turmoil.
Companies expect that the incidence of fraud will continue to increase in the economic crisis.
These are some of the findings of a recent snap poll carried out by Deloitte among 25 senior risk managers from a broad spectrum of companies.
Graham Dawes, a director in the risk advisory division at Deloitte, said yesterday : "The overriding concern in times such as these is that fraud in organisations will increase significantly."
The country had already seen an upturn in reported commercial crime statistics. This was to be expected where the gross domestic product was on the decline, Dawes said. For instance, with the turn of the millennium and the burst of the dot com bubble, commercial crime spiked upwards.
However, there was a gradual decrease in white-collar crime from 2001 until 2007. "There is an upward increase again in reported commercial crime as SA heads into one of its worst recessions," he said.
Fraud is considered to be the country's top financial crime, with police now investigating financial crimes totalling more than R8bn. Dawes said only 10% of cases were reported to the authorities.
"We are seeing a lot of high- level fraud taking place within companies," he said. Companies were also seeing huge shrinkage of stock taking place. "Theft of assets is taking place by those who are desperate and in need." Dawes said upper-income employees tended to manipulate the payroll.
He said companies were starting to consider adapting fraud-prevention strategies.
Dawes said fraud risk management was an integral part of business risk management processes. He said a robust anti- fraud strategy should be at the centre of this initiative.
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