Survey Documents Prevalence Of Corporate Fraud

Sixty-five percent of respondents to a recent KPMG Peat Marwick LLP survey believe fraud to be a "major problem" in their companies. The survey results are based on 500 responses to a mailing sent to 5,000 U.S. companies. Twenty-one percent of respondents reported annual losses of $1 million or more due to fraud. The most costly types of fraud include: medical/insurance claims fraud, falsified financial statements, and credit card fraud. Of the respondents who attached a specific dollar amount to the type of fraud they suffered, the average annual loss due to medical and insurance claim fraud was reported to be $3.2 million. Fifty-nine percent of companies surveyed believe that the occurrence of fraud will continue to increase. Asked why they anticipate an increase, 63% of respondents cited economic pressures, 62% mentioned inadequate punishment of convicted criminals, and 60% highlighted a weakening of society's values. "These findings tell us that fraud cuts across industry lines in America and is cutting into the bottom line for companies and affecting shareholder value," says Kyle Midkiff of KPMG's forensic and litigation services practice. "Every company is at risk of being subjected to this kind of behavior, which affects the financial and emotional well-being of the organization. The key to preventing fraud is to understand how it can affect a company, and put controls in place to recognize and stop it from occurring."