Volatile economic conditions coupled with increasing business and technological complexities have led to increased opportunities for

fraud. Organizations have to constantly deal with fraud and compliance challenges in todays business environment. Not surprisingly, a majority of the survey respondents perceive an increase in the level of fraud in India, in general, and also within their industry.

PERCEPTION OF FRAUD IN INDIA

Strongly agree 100% Agree Disagree Strongly disagree

Fraud is on the rise

Around 75% of the respondents believe that fraud incidence in India have increased in the last two years.

Considering the current economic environment, 81% of the respondents perceive financial statement fraud as a major problem in India.
Not sure (in %)

Financial statement fraud continues to be a major concern

Financial statement fraud is a major issue in India

FS CM

Fraud perception in industry

19 5 8
100%

62 26 20 19 34 46 50 55 57

11 14 12 12

8 9 10 10 5 4

Regulations in India are effective in deterring fraudulent financial reporting Strict disciplinary actions are imposed for cases involving fraudulent financial reporting There is a timely redressal of regulatory violations involving fraudulent financial reporting

50% Others

RE & Infra IM

ICE

0%
FS: Financial services IM: Industrial markets

Fraud perception in India 50%

CM: Consumer markets RE: Real estate and infrastructure

ICE: Information, communication and entertainment

I have faith in my organizations internal controls in detecting fraudulent financial reporting

Break-up of these industry segments is given in the profile of the respondents

Common forms of accounts manipulation

Discount/undisclosed benefits Bad debt under/over provision Advance billing Misrepresent Rebates/charges Manipulating credit status manipulation depreciation periods for fixed assets Hidden contract Sales terms False consulting Joint ventures with Transfer Purchases pricing Misrecording contracts connected parties Accounts capital/revenue Others Reports inconsistent with manipulation Under/over account records Delaying/advancing accrual False payments Transfer at other than claims Stock Cash False market value capitalization Misvalue Pledging Suspended of costs False assets Teeming and items quantity/quality lading Returns Misuse of group Standard cost cash flows Manipulation of False manipulation time period status False sales/debtors

Processes perceived as most vulnerable to fraud risks (multiple choice)

57 44 33 36 39 44
(in %) Consumer markets Information, communication and entertainment Real estate and infrastructure Financial services Industrial markets

29 30 24 24

29 28 21 16 15 4 3 22 12 11 12 12 0 Treasury 3 11 12

Sales and Procurement distribution

Inventory

Finance / payments

0 Administration

Types of fraud experienced by respondents

(multiple choice)
(in %) (through 73% false invoicing, false claims, pilferage)

Value of fraud
73 57

Diversion/theft of funds or goods

Up to 87% of survey respondents state that their organization had incurred fraud losses of more than Rs10 lakh.
>Rs10 crore

Bribery and corruption (including kickbacks) E-commerce and computer-related fraud Regulatory non-compliance Financial statement fraud Intellectual property fraud (counterfeiting, piracy) Corporate espionage Money laundering Others
Source: KPMG in Indias Fraud Survey 2010

10%

23 22 18 16 14 9 15
Rs1-10 crore

<Rs10 lakh

13%

29%

48%
Rs10 lakh-Rs1 crore