Consultancy firm Deloitte has said more than half of the business professionals covered in its new survey feel that more corporate financial statement frauds will be uncovered in 2010 and 2011 than the last three years.
According to the survey of around 2,100 business professionals, 56 per cent of the respondents think more financial statement frauds will be unearthed this year and in 2011 than the last three years combined.
"Almost half of those surveyed (46 per cent) point to the recession as the reason more financial statement fraud will be uncovered," the survey stated. Moreover, it is getting harder to assess financial statement fraud risks because of changes in the risk environment, it said.
"It is no great surprise that business professionals expect the greatest growth in financial statement fraud schemes... to be in the financial services industry," Deloitte Financial Advisory Services LLP Forensic Centre director Toby Bishop said.
"Because today's regulatory scrutiny of certain industries may result in additional enforcement measures, it would be prudent for companies to consider refreshing their fraud risk assessments and fraud risk mitigation activities," Bishop added.
About 25 per cent of the respondents in the Deloitte survey believed that the action most useful to their organisation for mitigating the risk of financial statement fraud would be training staff to recognise such manipulation.
The survey also found that more than one-third (38 per cent) of the respondents believe that in the current economic environment, revenue manipulation is the type of financial statement fraud which is of greatest concern.
Meanwhile, 18 per cent of the respondents cited 'big bath' write-offs and 14 per cent cited manipulation for debt covenant compliance purposes as the biggest threat.
Fifty per cent of the business professionals surveyed said the financial services industry would have the greatest percentage increase in financial statement fraud in 2010, compared to 2009.
This was followed by technology, media and telecom (14 per cent), consumer business (12 per cent), life science and healthcare (10 per cent) and manufacturing (six per cent), the study revealed.
