:: Deepquest ::

KPMG UK has produced a report to help us identify people who would defraud our companies. It is interesting, mostly in terms of the questionable nature of the conclusions.
The profile is based on 360 cases of detected and investigated fraud, in Europe, South Africa, and the Middle East.

The 38 page report is initially long on platitudes, although is does provide data in the later stages. The “personal” profile (on page 8) is probably the most interesting part:

70% of fraudsters were between the ages of 36 and 55 years old, and so in the later stages of their career.

85% male.

68% acted independently.

89% insiders. (We knew that …)

60% senior management. An additional 26 % of frauds involve management level persons bringing the total to 86 % of profiles involving management.

87% employed 2 years or more at the company defrauded. (Highest proportion in the 3-5 year range.)

The internal fraudster most often works in the finance department followed
by operations/sales or as the CEO.

The response suggested by the report is vague. The recommendations are the
same that we’ve all heard, with a heavy emphasis on “internal controls.”
However, the data in the profile doesn’t necessarily support this advice:
internal controls are not terribly effective, according to the reports.

confession of perpetrator 2%
negligence of perpetrator 2%
complaints by suppliers 4%
accidentally 8%
complaints by customers 9%
suspicious superior 9%
internal controls 10%
external controls 10%
management review 21%
whistle blowing 25%

(The type of fraud is also interesting:

counterfeit 1%
insider trading 1%
money laundering 2%
breach of secrets 2 %
other fraud 9%
embezzlement 10%
theft of other assets 10%
false financial reporting 20%
theft of cash 22%
corruption 23%

This is the data from Europe. Theft of cash and “corruption” are higher in
South Africa and the Middle East figures.)

more from [url=http://www.kpmg.co.uk/pubs/ProfileofaFraudsterSurvey(web).pdf]KPMG[/url]