Corporates in India do not struggle enough to fight against fraud

A research conducted by Deloitte India indicates that, though 88% of survey respondents felt a stringent regulatory environment could help reduce instances of fraud in the future, 56% believed incidents of fraud would continue to rise over the next two years. Only 38% respondents indicate that they organise periodic training programmes for senior management on fraud risk management. Only one-third respondents took legal action against any fraudster.

Findings reveal most respondents identifying two provisions in the company law - the mandatory establishment of a vigil mechanism for listed companies, and greater accountability on board and directors to prevent and detect fraud - as key measures to fight fraud. Diversion or theft of funds or goods, bribery and corruption, and regulatory non-compliance are seen as the top three types of fraud experienced by corporate India over the past two years.

As a means to detect fraud, respondents indicate relying on internal audit reviews (62%), whistleblower hotlines (53%) and IT controls (51%). The report unveils that actions taken by corporates upon detection of fraud continue to remain conservative - internal investigations (87% respondents), disciplinary action taken against the fraudster (78%) and update of existing controls (77%).

Most survey respondents did not contemplate the danger from emerging fraud risks, such as social media fraud (69%), ecommerce fraud (60%), cloud computing fraud (96%), and virtual-currency fraud (50%). Company executives cited leakage and data loss of confidential company information, fraudulent transactions through usage of stolen or hacked credit/debit card information and liabilities therein, and re-direction of payments to fraudulent accounts for purchase of goods, as among the key risks of doing business online.