March 17, 2009 10:49 ET

Who Is Committing Fraud in Canada? Three Out of Four Times, It's a Man: KPMG Survey

TORONTO, ONTARIO--(Marketwire - March 17, 2009) -

Attention: Business Editors, HR Editors, and Crime Beat Reporters

In these economic times investors should be aware that fraudsters can come in all shapes and sizes. Who commits fraud? What characteristics should you look for? In Canada, almost 3/4 of fraudsters were men. Most commonly, they have been with their employer for 3-5 years. 69 per cent of fraudsters were between the ages of 30 and 49. All of this is according to the latest study by KPMG entitled Profile of a Canadian Fraudster.

The survey polled senior executives such as CFOs and Vice-Presidents from across Canada and covered a wide range of industries, including Financial Services, Energy and Natural Resources, Consumer Markets, and Industrial Markets. One quarter of respondents had revenues of over CAD$1 billion, with another quarter having less than CAD$100 million in revenues.

"Now more than ever, Corporate Canada cannot afford to wait for a Ponzi Scheme or more tales of corporate greed to occur before they take the problem seriously. Shareholders are demanding more accountability in these times," says James Hunter, National Leader of KPMG's Forensic practice.

The report revealed that 69 percent of fraud cases were internal jobs, 20 percent external ones, and 11 percent involved both insiders and outsiders.

Findings of the survey were as follows:

- Sixty-two percent of frauds were carried out by individuals below the level of management, while 22 percent were carried out by senior management.

- Most commonly, the fraudster will have been working for the defrauded company between 3 and 5 years.

- The education level of those committing fraud varied: 40 percent had no post-secondary education, 30 percent had some post secondary education, while 26 percent had either a university degree or a professional designation.

- Seventy-three percent of fraudsters acted alone and in a mere 7 percent of the cases more than 5 people were involved.

- The three main factors reported as leading to fraud were personal need (28 percent), opportunity (19 percent), and greed (14 percent).

- Interestingly, bad habits (alcohol, drug abuse, gambling) were a factor in only 11 percent of reported cases.

To detect and prevent fraud, companies should look at three things;

- An effective whistleblowing hotline

- A robust and properly implemented code of business conduct

- A consistently applied and thorough system to prescreen new hires.

"The number one method to help bring fraud to light at an early stage is a robust upstream communication mechanism-in other words, an effective whistleblowing or ethics hotline. Nothing else is quite so powerful," says Hunter.

About KPMG

KPMG LLP, a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm affiliated with KPMG International, a global network of professional firms providing Audit, Tax, and Advisory services. Member firms operate in 144 countries and have more than 137,000 professionals working around the world.

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