Over 50% of certified fraud examiners say they have personally observed financial misconduct in the past year, according to a new survey on corporate fraud.
Around three-quarters of participants also said they felt institutional fraud was more prevalent today than in 2002, when the Sarbanes-Oxley (SOX) Act was passed in response to accounting scandals at companies such as Enron and WorldCom.The annual study, sponsored by Oversight Systems, a provider of continuous monitoring and audit solutions, polled 86 U.S. certified fraud examiners, including internal auditors, independent auditors, law enforcement officials, investigators and management consultants.
Participants were asked to select the three main reasons institutional fraud occurs. Four out of five chose the pressure "to do whatever it takes to meet goals" as the most common reason behind institutional deceit.
Executives seeking personal gain was identified as another major cause of fraud, followed by executives' misconception that they would "not get caught". Around 40% also said they did not believe their acts were fraudulent.
"Around 60% of fraud is perpetuated by managers and executives," says Patrick Taylor, CEO and founder of Oversight . "So, as opposed to spinning all their SOX efforts watching other employees, companies should look at the activity of managers."
Just five percent of those surveyed cited a lack of understanding of laws and accounting regulations as a reason for their wrongdoing.
"Culture is everything when it comes to fraud and fraud prevention," Dana Hermanson, Dinos Eminent Scholar Chair of Private Enterprise at Kennesaw State University, said in a release.
"If there is a culture of never missing targets, some people will cheat to make the numbers. Their rationalization is that they are just doing what the top people want them to do. Directors and executives need to clearly communicate that ethics come before making targets," she said. Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio