Fraud cases to spike in next two years; cyber crimes, financial statement frauds to dominate: Survey

A significant percentage of independent directors believe that the current business environment induced by the pandemic can spur fraud over the next two years, says a survey. Deloitte Touche Tohmatsu India LLP (DTTILLP), in association with the Institute of Directors (IOD), released a survey ’Corporate fraud and misconduct: Role of Independent Directors’, the findings of which reflect that around 63 percent Independent Directors (IDs) believe fraud cases will rise in the next two years.

According to the survey, large-scale remote working and cash flow crunch were identified as the key factors for the expected rise in frauds. Cybercrimes and financial statement frauds are likely to dominate fraud schemes, it added. ”Although there are multiple priorities for those charged with corporate governance, given the current economic climate, it is likely that some organisations may seek to focus on prioritising sustainability of operations over other matters. Under such circumstances, IDs need to act with the highest standards of vigilance and prudence,” said Rohit Goel, Partner, Forensic, Financial Advisory, DTTILLP.

Around 75 per cent IDs believe that they could play a significant role in fraud prevention and detection. Moreover, around 57 percent IDs indicated that their board had established an effective Fraud Risk Management (FRM) framework, the survey said, adding that training on FRM is the need of the hour.