Gambling, greed and identity crime have combined to double the level of reported corporate fraud in Australia, with the worsening trend having a potential impact on fidelity insurance premiums.    

KPMG’s eighth biennial Fraud Survey reveals gambling is the most common motive for fraud, at 44% more than double the frequency of the previous 2006 survey.

KPMG Forensic Head Gary Gill told insuranceNEWS.com.au the increase in corporate fraud will be exacerbated by the current economic downturn, putting pressure on associated premium rates.

“I suspect if fraud definitely increases it will ultimately drive premiums up,” he said. “Results for this survey were taken before the credit crunch, so I expect we will see that trend get worse.”

The report found the most common method of fraud is unauthorised use of a credit card. The typical fraudster is a middle aged non-management male, well versed in the operations of the target company.

“Typically motivated by greed and acting alone, he misappropriates cash to an average value of $262,000 over 11 months,” Mr Gill said of the average offender. “His employer can expect to recover as little as 12% of the proceeds of the fraud.”

Some 45% of respondents experienced at least one fraud during the two-year survey period, while 22% of cases organisations had ignored relevant warning signs.

Poor internal controls remain the key factor in fraud exposure.

“An effective, business-driven approach to fraud risk management combines prevention, detection and response,” Mr Gill said.