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Typical fraudsters are trusted managers, says research

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19th Apr 2007
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The typical company fraudster is a trusted male executive who will get away with their underhand dealings for up to five years, research from KPMG Forensic has found. Matt Henkes reports.

The study said that the fraudster will usually commit up to 20 fraudulent acts in this period.

After looking at 360 real fraud cases, KPMG found that the pattern is similar across all regions. “The typical fraudster is aged between 36 and 55,” it said. "By the time he starts enriching himself by illegal means, he has usually been employed by the company for six or more years."

The fraudster often worked in the finance department and committed their crimes single handed, it added. In 86% of cases, the perpetrator was employed at management level, while two thirds were senior managers.

"Greed and opportunity are his motivating factors," it said.

In half of the cases studies, weak internal controls were blamed for allowing the frauds, with whistle blowing and management reviews the most common method of discovery.

Offences only occasionally undergo a criminal investigation, said KPMG, because many companies fear the damage to their reputation that this can cause. Most commonly, investigations are conducted without the help of the police of any other public authorities.

Richard Powell, a partner at KPMG Forensic, said that firms have a challenge on their hands. "Over 60% of perpetrators are members of senior management, whose status in the company makes it easier for them to bypass internal controls and inflict greater damage on the company," he said.

"Recoveries of losses from fraud can take several years to be completed. Prevention, such as introducing ethics and integrity measures at the top management level, is always a more efficient and cost-effective means."

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