There will be rise in financial statement
fraud over the next couple of years, according to a Deloitte US
webcast survey of 2,100 business professionals.
More than
half (56 percent) of
respondents predicted the increase while 46 percent blamed the
recession as motivating
force.
Just under half (45 percent) of
participants said it is becoming harder to assess fraud risks
because of changes in the risk environment. About one in ten
respondents believe picking up fraud will get easier.
The survey, Reducing Financial Statement Fraud Risks:
Ten Things You Need to Know, found that revenue
recognition manipulation is of greatest concern, followed by ‘big
bath’ write-offs while expectations are low, and accounting
manipulation for debt covenant compliance purposes.
“Our respondents recognised that changes in
the risk environment have made it harder to assess financial
statement fraud risks, but that’s the first step in controlling
them. Enhancing fraud risk management is a key part of how
companies can more effectively mitigate risk and protect
shareholder value,” said Toby Bishop, director of the Deloitte
Forensic Centre.
Respondents said additional training,
improving tone at the top and improving fraud risk assessments are
the most useful actions for mitigating fraud risk.
The financial services industry was
deemed to be at greatest risk.
