When I was 10 years old I vividly recall reading anarticle in my local paper, which chronicled a wild crime spree by twoindividuals. They had apparently robbed something like six banks and in theprocess, shot several people - two of whom died - before they were apprehended.
I turned to my grandmother and asked how someone could dosomething like that knowing that we have laws against it. She turned to me andcalmly explained that laws "don't always influence morality."
In two-plus decades of covering the business andfinancial arena in a number of vertical industries, I can say I've seldomreported on something as dramatic as a shoot-'em-up crime spree, but havedevoted a significant amount of editorial space to the subject of fraud.
And if recent surveys carry any weight, it appears I willneed to allocate a few more pages to adequately cover this disturbing topic,which seems to transcend laws, diligence or advancements in IT solutions.
Last week, a poll by Big Four firm KPMG found that nearlyone third of the corporate executives they questioned fully expect "fraudand misconduct" within their organizations to rise this year.
In particular the fraud "hot spots" will mostlylikely lodge in the areas of financial reporting, asset misappropriation orethics.
Not surprisingly 71 percent of the executives polled byKPMG say they worry most about a loss of public trust if such problems areuncovered in their organizations. The reason that the loss of public trusttrumps the actual acts themselves is that traditionally, companies have justfired the person or persons responsible for fraud and quashed the newsinternally.
But what I find truly disturbing is that nearly a quarterof the respondents revealed that their respective organizations did not fullyunderstand how to conduct fraud investigations or even at what point theirboard of directors should be alerted to any potential fraud concerns.
Add to that, a full third admitted that their companieslacked protocols on how to remedy breakdowns in internal controls.
I may be naïve but it still astonishes me that despitefrauds that have comfortably exceeded the gross national product of some thirdworld nations over the past several years and a literal gallery of corporatevillains, some companies still perceive fraud as employees smuggling yellowpads and staplers under their overcoats.
For sure, the current economic climate will do nothing toact as a fraud deterrent, but more likely serve as a kerosene-soaked mattressin a match factory. Desperate times do indeed persuade decent people intomaking wrong choices.
But from a practical standpoint there is too much help -personnel-wise, consulting, Webinars or technology-driven applications -available today that were not there a decade ago to help lessen a company'sexposure to fraud.
My grandmother was right. Morality cannot be legislated,but you can certainly make it more difficult for people to veer off course.
