More organizations detecting fraud, spurred by new regulations, investor demands.(Communique)

Spurred by new government regulations and demands by investors, more companies today are working to uncover fraud, finding it, and taking action against those who commit fraud, according to a new survey by KPMG LLP. The KPMG survey showed that 75 percent of respondents report they have uncovered fraud in their organizations in the last year, compared with 62 percent of executives responding to a similar survey in 1998. Employee fraud occurred the most frequently, according to survey respondents, although financial reporting and medical/insurance fraud were much more costly. KPMG's 2003 report surveyed executives at 459 U.S. public companies, with revenues of more than $250 million, and at state and federal government agencies.

"Companies and their boards are more intent on uncovering fraud and misconduct as a direct result of corporate governance legislation and other mandates, including the Sarbanes-Oxley Act, put in place over the past two years," said Richard H. Girgenti, partner in charge of KPMG's Forensic practice. "As we read in the newspapers every day, an incident of fraud within a company can bring intense public scrutiny, government investigations, loss of market capital and severe penalties, while sending skittish investors scurrying."

Despite heightened awareness and broader implementation of fraud detection controls, more than one in five executives surveyed--22 percent, said they do not plan to implement new controls. "This finding was regrettable, and may put these companies at greater risk for not only experiencing incidents of fraud and misconduct, but also for facing higher fraud costs and damage to the company reputation when incidents do occur," Girgenti said.

The KPMG survey found that company management is taking a more active approach in detecting fraud through internal controls ...