Economic crime was a problem worldwide, but South Africa suffered particularly from this sort of crime, a survey conducted by global accounting firm PricewaterhouseCoopers (PWC) found.
Louis Strydom, director of forensic services of PWC South Africa, said on Tuesday the survey found that 71% of South African companies had fallen victim to economic crime during the last two years. Globally, 37% of companies had experienced economic crime during the same period.
More than 3 500 chief executives and financial directors worldwide were interviewed for the survey.
Theft of assets was by far the biggest problem in South Africa and Africa, Strydom, said. He said about 79% of the 91 South African respondents said they had experienced asset theft, compared to the global figure of 59%.
”Corruption and bribery was reported by 21% of South African respondents, compared to 14% globally,” Strydom said in a summary of the survey.
Economic crime was most frequently detected by internal and external audits, tip-offs, risk management systems and also accidentally. The South African respondents in the survey said that economic crime affected staff morale and led to damaged business relationships. It also negatively affected reputations. The survey also found that larger companies, with more than 1 000 personnel, were most likely to fall victim to fraud. Of the larger companies included in the survey, 52% had experienced economic crime in the last two years. Of the smaller companies, 37% had fallen victim to economic crime.
Larger companies detected economic crimes easier than small companies due to several factors, one being better fraud risk management systems.
Financial institutions were also more vulnerable to fraud, the survey found. The survey found it was difficult to quantify the financial loss from economic crime, especially for less tangible forms like cyber crime.
”One third of the companies that had reported fraud were unable to put a value on the crime.”
Losses were rarely recovered and companies were unlikely to be insured against fraud losses. But it was also found that companies who had fallen victim to fraud were more likely to take out insurance. – Sapa