A new study has found over half of all fraudulent acts committed against companies are done so by an employee of that company.
The study from KPMG International revealed the profile of the average fraudster to help organisations better protect themselves.
Gary Gill, national head of forensic at KPMG Australia, said that we’ve entered a new era for fraud and illegal activities, as more people adopt new technologies.
“Social media not only provides increased opportunities for collusion between internal and external parties, but also allows hackers to mine and use the increasing amounts of available online data in targeted cyber attacks,” Gill said.
“Organisations must be as sophisticated in their cyber security as the hackers are in their methods. Cyber security must be a top priority in all risk management strategies.”
According to the report, almost three quarters of fraudsters are aged between 36 and 55, and collusion occurs in 70 per cent of cases.
The most prevalent type of fraud is misappropriation of assets; 40 per cent is embezzlement, while procurement fraud makes up 27 per cent.
The main reasons people commit fraud is because of some motivating factor opportunity, and rationale. Over 35 per cent of perpetrators exhibited a sense of superiority as rationale for their fraud, while over half the cases studied were motivated by greed, financial gain, or financial difficulty.
The report also found that executive directors committed 29 per cent of frauds.
Mark Leishman, Asia Pacific investigations leader at KPMG, said corruption was a common element in cases of collusion, and the increasing rates of collusion between insiders and outsiders suggests bribery will become a growing problem.
“In Australia, changing economic circumstances have caused many organisations to adopt cost cutting measures, which often start with back-office and middle management. These measures in turn have a real impact on the effectiveness of companies’ internal controls, increasing the opportunity for fraud,” Leishman said.
“In this environment, procurement fraud, misappropriation of cash, and information theft are the most common threats.”
KPMG warned that organisations must understand the changing environment and behaviour of the fraudster in order to mitigate the risk of fraud and respond quickly if a crime occurs.