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`Fraud risk preparedness very low'

Our Bureau

`Corporate India concerned'

Hyderabad , March 23

The financial sector susceptibility to fraud risk and the preparedness of Indian corporates to address fraud is very low, according to India Fraud Survey Report 2006 brought out by consultant KPMG.

The survey said that barely 24 per cent of the respondents had the relevant physical and logical access controls to tackle such serious issues.

Topping the radar of risk are banking, insurance, mutual funds and asset management companies with 23 per cent of the respondents believing them to be the most vulnerable to malfeasance, while 17 per cent of the respondents put NBFCs and Investment Banks on high risk alert. Information communication and entertainment sector follow in the pecking order.

Launching the report, Mr Adam Bates, Global Forensic Chairman, KPMG said, in a statement said "with the boom in the financial sector and organisations facing different set of challenges, the risk faced by corporates is increasing many fold. There is a rising need to manage and mitigate the risk more effectively."

The survey seeks to capture the impact on corporate India due to the changed regulatory environment brought about by initiatives such as Clause 49 of SEBI and the Sarbanes Oxley Act (in the US), higher levels of transparency and proactive fraud management.

The survey observes that there is a growing concern over fraud in corporate India as there is an evident impact on profitability. It finds that rupee losses have been most in the case of expense accounts (23 per cent) whereas incorrect information and personal use of official assets were other significant reasons for rupee losses.

The report highlights the need to have a formal fraud response plan to to mitigate the risk. Fighting fraud and mitigating fraud risk is gaining importance. Corporate India wants to proactively safeguard against the perils of fraud and misconduct.

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`Fraud risk preparedness very low'

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