Half NZ firms victims of fraud

The 2006 KPMG Fraud Survey of 465 organisations found that 53 per cent of New Zealand organisations had experienced at least one fraud. In eight cases the loss was more than $4 million, and 63 respondents lost more than $200,000. In 42 per cent of major frauds none of the money or goods stolen were recovered.

The survey was based on a questionnaire sent in February to 465 public and private sector organisations in Australia and New Zealand.

KPMG forensic director Mark Leishman said the main motive for fraud was greed and to finance lifestyle. Personal financial pressures were second.

"Gambling, which represented 22 per cent of the motive for the overall survey, was significantly lower in New Zealand [than Australia], at 8 per cent, but still showed an increase from 2004," he said.

"Despite being in the headlines, fraud is still hitting the bottom lines of New Zealand companies."

Mr Leishman said there were some basic things that organisations could do to cut fraud.

"False invoicing and theft of cash and inventory remain the most common frauds for organisations, suggesting that controls over these age-old fraud risks are poor," he said.

"In addition, 14 per cent of employees involved in fraudulent conduct had a history of dishonesty with previous employers ... A background check may have uncovered this."

The increase in computer data manipulation indicated the increased use of IT systems generally, which confirmed KPMG's experience that controls over access and changes to computer data were often poor.

Mr Leishman said 61 per cent of respondents who operated in Asia suffered at least one incident of fraud during the survey period, indicating corruption was a major problem in Asia.

Survey highlights included:

* 47 per cent of all respondents experienced at least one fraud during the survey period, up marginally from 45 per cent reported in 2004.

* Total value of fraud reported was $154.9 million with an average value for each organisation of $714,000.

* Greed and lifestyle considerations, with gambling, were the most common motivators of fraud.

* 75 per cent of respondents had a system for anonymous reporting of fraud.

* In 42 per cent of major frauds none of the money or goods were recovered.

* 14 per cent of employees involved in fraudulent conduct had a history of dishonesty with previous employers.

* 17 per cent of major frauds involved the use or misuse of computers.

* 61 per cent of respondents believed identity fraud was a major problem.

* Respondents reported 546 cases of identity fraud, with a value of more than $2.8 million.


Typical fraudster

* Non-management employee with no known history of dishonesty.
* Man, aged 38, acting alone.
* Employed by the organisation for five years.
* Half of New Zealand businesses are victims of fraud and it costs them an average $479,000.

- NZPA