Fraudulent acts by employees and outsiders have risen since the beginning of the recession, and internal auditors predict the trend will continue through the rest of the year, according to a new poll of nearly 300 chief audit executives by the Institute of Internal Auditors.
Among the 31 percent of survey participants from organizations where instances of fraud were detected since 2008, 43 percent report that fraud occurrences increased from 1 percent to 10 percent, 28 percent indicate fraud increased from 11 percent to 20 percent, and 14 percent say fraud increased by more than 20 percent. Theft of company property and resources including proprietary information is the fastest-growing fraud reported by respondents, followed by embezzlement, including expense account fraud and third-party or vendor fraud.
The IIA believes internal auditors can add value to their organizations fraud risk management efforts through assurance and consulting activities such as automated data mining and analysis.
Throughout my career of more than 30 years as an internal auditor, Ive seen several recessions come and go, and their impacts on organizations have followed predictable patterns, said IIA president and CEO Richard Chambers in a statement. The recessions weve experienced in the past, like the one were just emerging from, foster an environment thats highly conducive to fraud schemes, and internal audit activities are in a perfect position to show their great value during these turbulent financial times.
The majority of organizations represented in the survey (76 percent) have implemented a fraud risk management program, 34 percent of which are formal and 42 percent informal in nature. These programs commonly feature processes for detecting fraud and policies on and procedures for reporting suspected frauds.
The IIA has published a Knowledge Alert to help board members and management discharge their responsibilities for deterring fraud. For more information, visit www.theiia.org.
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