Survey shows nearly one in four companies in S'pore hit by fraud - Singapore News - 24 Jul 2008

SINGAPORE: Despite calls for greater corporate governance, nearly a quarter of the top 1,000 companies in Singapore - including publicly-listed ones - have been hit by financial fraud.

This is the finding of a survey by accounting giant KPMG, which also found that fraud was more likely to occur internally.

And it is now costing companies in Singapore three times more than it did in 2004. Financial fraud cost Singapore companies at least S$4.4 million last year.

Six in 10 fraud cases started internally, even with internal controls in place.

Bob Yap, KPMG's head of forensic, said: "Internal control can break down if there is collusions between employees, between the management. If there is an overwrite in controls, the internal controls will still break down.

"So, I think it is about the ethical culture within the organisation, it is about the continuous training and awareness and the framework that we put in place - to prevent, detect and respond to such a fraud."

The KPMG survey also showed there has been a surge in the number of computer-related fraud since 2004. The number jumped from 19 per cent in 2004 to 59 per cent in 2007.

Financial reporting fraud also rose, from 9 per cent in 2004 to 24 per cent in 2007. This was largely because employees wanted to hide under-performance.

Nearly half of the respondents to the survey said fraud reporting channels in their company are not independent and effective.

KPMG said while it is important for companies to have comprehensive fraud risk management frameworks, other mechanisms like whistle-blowing are also necessary.

KPMG's Mr Yap said: "It is the tone from the top that is going to drive the ethical culture within the organisation. And with a right tone and a right culture, with a continuous training and awareness being inculcated within the organisation, I think that's how we can basically mitigate the risk of fraud."

The survey was sent out to more than 1,400 companies in Singapore, and it received 160 responses.

By Timothy Ouyang, Channel NewsAsia