Fraud on the rise in times of crisis

Corporate fraud is more prevalent but easier to detect in tough financial times, according to forensic accountants about to form a special interest group in Canberra.

Forensic Accounting Special Interest Group's national chairman, Owain Stone, said people under pressure were more likely to commit fraud.

''When things are going well, when everyone is doubling their turnover, the fact that you haven't quite doubled your turnover, the fact it's only by 50 per cent and the other 50 per cent is hot air and creative accounting, that doesn't get picked up until things start going the other way,'' he said.

''No one put it so well as [American billionaire] Warren Buffett who said, 'It's only when the tide goes out that you see who is swimming naked'.''

The Australian Crime Commission's chief director of strategic outlook and policy, Kevin Kitson, will talk about identifying financial crime ''below the waterline'' at the Forensic Accounting Interest Group's inaugural meeting in Canberra on May 20.

The Commonwealth Director of Public Prosecutions, Marcus Hassall, will also speak about trends in Australia's organised criminal environment and its implications for risk management.

The Commonwealth's system for seizing and confiscating assets generated from financially motivated crime will also be discussed.

The ACT group's chairman is coordinator of the Australian National University's financial analytics and investigations course and a former Crime Commission financial crime intelligence group manager, David Lacey.

He said the group aimed to promote better understanding of the work of forensic accountants to the judiciary and legal profession.

''What distinguishes the credit crisis from other types of forensic-related work, is there is not necessarily one person, or one individual that people point to as being a culprit, it is more a systemic failure and forensic accounting covers both aspects.''

Mr Stone said fraud was not always reported and police did not know its extent because people did not tell them.

KPMG's head of forensics Australian practice, Gary Gill, said gambling, greed and identity fraud had doubled the amount of reported corporate fraud.

The increase would worsen in the current financial crisis.

Mr Gill said gambling was now the most common motive for fraud, accounting for 44 per cent of the value of fraud.

''Our typical fraudster is a 38-year-old male with no known history of dishonesty.

''A non-management employee of the victim organisation, he has held his current position for four years by the time of detection.''

Source: www.canberratimes.com.au ; BY JOHN THISTLETON