'Fraudsters likely to work in accounts'

When executives commit fraud, company losses are considerable. Image: Pixomar Free Digital Photos

Deloitte Forensic's Bruce Thornton said that executives from Africa (most of them from South Africa) were behind only 12% of fraud cases but the average loss they caused was about R8m.

This is in stark contrast to lower-level employees, who were responsible for about half of the cases. The average losses were about R550 000.

Thornton said that the trend of executives defrauding their companies was exacerbated by the economic conditions. "The recent downturn played a role in increased fraudulent behaviour by executives. A downturn in the fortunes of a company hurts their disposable income," he said

"The number of incidents committed by lower-ranking employees is higher, but the damage done by executives who steal is far more. Senior officials are most likely to be involved in high-level fraud because they're able to override internal controls more easily," he said.

According to a 2012 report by the international Association of Certified Fraud Examiners, fraud by their executives costs companies as much as 5% of their annual revenue.

The report said that fraudsters in most cases had a university degree, and the perpetrators of the biggest frauds had a greater likelihood of having a post-graduate degree and were most likely to be working in the accounts department.

Corruption Watch executive director David Lewis said senior officials, both in the private and the public sector, had the ability to undermine controls because of the power of their position.

Source: The Times via I-Net Bridge