According to a joint study by industry body Assocham and Grant, for about 39% of organisations, the potential loss from fraud is estimated at less than USD 25,000, while for 37% of organisations, the potential loss is between USD 25,000 and USD 249,999. The potential loss is USD 250,000 or more for 17% of organisations.
Businesses that are subject to audit and have experienced fraud, especially if the fraud was perpetrated by the company management, are likely to be assessed as a high audit risk. That means auditors will scrutinise company books more closely before signing off on its financial statements.
When an auditor is required to perform more procedures, the cost of the audit will increase. This can often be mitigated by demonstrating that the offending managers or employees have left the company and the company has instituted strict procedures to thwart future attempts at fraud.
Many businesses are feeling the effects of the economic downturn and in their attempts to minimise losses, often they unknowingly open themselves to huge financial and reputational risks. This is due to the fact that when companies cut back on costs, they often increase their chances of being victims of fraud.
The report unveils that, as the popularity of internet shopping and online auctions grows, so does the number of complaints about transactions. Some of the most common complaints involve: buyers receiving goods late, or not at all, sellers not receiving payment, buyers receiving goods that are either less valuable, than those advertised or significantly different from the original description, failure to disclose relevant information about a product or the terms of sale.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now