A majority of U.S. companies are being victimized by economic crime, with losses totaling $223 million, according to a new study.
PricewaterhouseCoopers found that 53 percent of the U.S. companies it surveyed had been affected by some form of economic crime. And over 43 percent of the 5,400 global companies interviewed from 40 countries reported suffering one or more significant economic crimes. The average loss from fraud per company increased nearly 40 percent in two years from approximately $1.7 million in 2005 to about $2.4 million in 2007.
U.S. companies are taking a more proactive approach to safeguarding against economic crime, but they still need to rely on whistleblowers within their organizations to bring the crimes to their attention.
Approximately 33 percent of the crime reported arose from a whistleblower report or other internal tip-off.
Accounting-related fraud declined in the U.S. over the past two years, from 36 percent in 2005 to 13 percent in 2007. This may be explained by the effect of Sarbanes-Oxley on financial reporting. Seventy-one percent of U.S. respondents to the survey believed that Sarbanes-Oxley is at least marginally effective at detecting economic crime.
The accounting system can also have an effect. Companies in which the parent and subsidiaries operated different types of accounting systems were more prone to fraud than those that operated a single accounting system.
In the U.S., the typical profile of a fraudster is male (in 68 percent of cases), between 31 and 50 years old (in 35 percent of cases), and highly educated (64 percent of cases). For more information on the survey, go to www.pwc.com/crimesurvey.
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