Thursday 21 March 2019

Internal audit led the way in discovering 20 per cent
of the most disruptive fraud

Financial fraud cases reach 34pc in Mideast: study

DUBAI, April 25, 2018

Financial fraud cases in the Middle East increased to 34 per cent in the last two years compared to 26 per cent in 2016, according to a new report from PwC, a global leader in assurance, advisory and tax services.

 Asset misappropriation, business misconduct and fraud committed by consumers are the three most frequent types of fraud and/or economic crime reported by respondents in the PwC survey titled“2018 Middle East Economic Crime and Fraud Survey - Pulling fraud out of the shadows”.

 Internal Audit was the main contributor to detecting the most disruptive fraud experienced by respondents in the last 24 months (20 per cent) followed by internal tip-off’s (18 per cent), fraud risk management and suspicious activity monitoring (both at 14 per cent).
Organisations are realising the rising value of anti-fraud technologies, and are looking to extend their investment and usage of it.

Nick Robinson, forensic leader at PwC Middle East said: “Social and environmental pressures are increasing the focus on fraud and economic crime issues across the region.  This rise is unsurprising as these issues are becoming more acute within organisations.  This increased awareness is clearly articulated in the survey findings as 34 per cent of respondents reported fraud and/or economic crime incidents in the last 24 months.”

“Technology is proving to be a strong ally. Organisations in the Middle East are making growing use of technology in their anti-fraud efforts, with 82 per cent agreeing that using technology for real time monitoring assists in combating fraud,” he added.

Fraud instigated by internal fraud actors is increasing rapidly, accounting for 48 per cent of economic crimes reported in the Middle East slightly below the global average of 52 per cent. Senior and middle management are the main perpetrators of internal frauds, accounting for 62 per cent of those reported.

Our study shows that the proportion of organisations that have performed a fraud and economic crime risk assessment within the past 24 months has leapt to 77 per cent in 2018 from 47 per cent in 2016.

Tareq Haddad, investigations leader at PwC Middle East said: “Preventing and discovering fraud in organisations is not an easy task. It involves a focus on culture and people, in addition to investing in controls and technology.

“Organisations in the Middle East having formal business ethics and compliance programs increased from 79 per cent to 82 per cent in the last 24 months. In addition, the results of the survey emphasize on the need to think outside the box when designing controls where 52 per cent of respondents pointed to the use of email monitoring as a valuable techniques in combating fraud.”

To tackle fraud, 42 per cent of Middle East organisations have reportedly increased the amount of money allocated to combating fraud and economic crime within the past 24 months, the same proportion as at a global level. And 49 per cent plan to increase it in the next 24 months, ahead of the global figure of 44 per cent – indicating that the focus on fraud is set to rise more quickly in the Middle East than elsewhere.

Over the past 24 months, disruptive economic crime has cost 46 per cent of respondent organisations between $100,000 - $50 million dollars.

“Our 2018 Middle East Economic Crime and Fraud survey highlights the need for organisations to take proactive steps towards understanding fraud more comprehensively by uncovering fraud blind spots and taking necessary action to prevent it,” concluded Robinson. – TradeArabia News Service

Tags: PWC | Financial Fraud | Internal audit |

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