NEW YORK (Reuters) - Global companies have seen a sharp rise in accounting fraud over the past 12 months, as the pressures of the recession have weighed on employees, according to a new survey on Thursday.
The survey of 3,000 senior executives in 54 countries from accounting firm PricewaterhouseCoopers PWC.UL showed accounting fraud had grown to 38 percent of the economic crimes in 2009, up from 27 percent in the firm's 2007 survey.
The increase in accounting fraud has come as employees face increased pressures to meet performance targets, keep their jobs and keep access to funding or financing from outside institutions.
“The recession has driven people to seek more capital and seek more funding for their business,” said PwC’s global investigations leader Steven Skalak, noting some companies may have employees trying to fudge the numbers to ensure their survival.
About 40 percent of those companies polled by PwC said the risk for fraud and economic crime at their companies had grown in the past year due to the recession.
More than two-thirds of that group, said there was a greater risk of fraud due to increased incentives or pressures, while 18 percent felt there were more opportunities to commit fraud, partially due to reductions in internal finance staff.
The survey showed no difference in fraud incidents between companies that had stable financial performance during the downturn and those companies that suffered.
“The impact of economic crime was really very pervasive,” Skalak said.
The other two most common types of fraud were asset misappropriation, which includes theft of petty cash, supplies or inventory, and bribery and corruption. Asset misappropriation represented 67 percent of the economic crime at the companies polled, while bribery and corruption represented 27 percent. Those figures were slightly down from the 2007 survey where asset misappropriation represented 70 percent of frauds and bribery and corruption was 30 percent.
Also, while companies are expecting more fraud, they have not done much to increase the frequency of the reviews they do to check for instances of fraud, Skalak said.
“People who look for fraud are more likely to find it,” he added.
Reporting by Emily Chasan; editing by Andre Grenon
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