A majority of the India Inc feels corporate fraud will rise in next two years, and have identified diminishing ethical values as the most common cause for such incidences, says a survey.
As per Deloitte's India Fraud Survey, about 70 per cent top executives representing large corporates, 54 percent belonging to small and medium enterprises and 65 per cent of working professionals indicated fraud would rise in coming two years.
Diminishing ethical values was identified as the top reason for frauds by 38 percent respondents from large firms, 68 per cent surveyed in SMEs and 42 per cent professionals.
"Respondents continue to identify known frauds such as bribery and corruption, diversion/theft of funds and vendor favouritism (only large organisations) and conflict of interest (only SMEs) as top fraud schemes that their organisations had experienced in the last two years," Deloitte said.
Interestingly, while concerns around fraud appear similar, the methods employed to deal with fraud revealed vast differences in approach within firms, indicating that fraud is complex and companies have a long way to go in mitigating it.
In the area of fraud prevention, large organisations appeared to be focused on preventing only historically known frauds, and appeared inadequately prepared to tackle new frauds such as social media and anti-competitive behaviour.
About 43 percent of respondents felt that investigations were commenced based on the severity of fraud, while 36 percent said the fraudster was allowed to resign in lieu of pressing legal charges. Besides, 33 per cent said fraud was communicated to employees, the board and regulatory agencies.
Within SMEs, 48 percent felt lack of commitment to tackle fraud, while 42 per cent sited inadequate budget and resource allocation to prevent such activity.
"SMEs are struggling to mitigate even well-known frauds such as bribery and corruption," Deloitte India Head (Forensic - Financial Advisory) Rohit Mahajan said.
"Given the inherent limitations of these organisations, there is need for government intervention to help tackle fraud," he added.
Further, the survey found that a majority (56 per cent) of working professionals believed that primary responsibility to fight fraud remained with them.
Moreover, about 70 per cent said that their employers provided enough opportunities for them to share instances of unethical behaviour.
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Updated Date: Dec 21, 2016 17:52:13 IST