BusinessCompany NewsCry for help to curb fraud

Cry for help to curb fraud

A plea has gone out to accountants to help tackle fraud by assessing clients, their business pressures and their tactics after an independent watchdog this week warned that weak economic growth is creating a 'climate' for serious financial crime.

George Staple, the Fraud Advisory Panel chairman, said poor economic performance uncovers fraud that would otherwise remain hidden. He called on the industry to reconsider the roles accountants fulfill for their clients and ask whether they could undermine auditing judgements.

‘General economic pressures reveal a level of financial malpractice that gets covered up in more favourable times. And some senior managers will always try to disguise losses or manipulate share prices,’ he said.

In the panel’s report, Staple urged accountants to place more emphasis on ‘the old-fashioned ability to assess people, the business pressures they face and the tactics they employ’.

The panel said the Enron collapse and WorldCom accounting scandal have ‘underlined the damage that even the suspicion of fraud in major companies may do to share values and therefore to the economy itself’.

The warning comes as KPMG’s yearly Fraud Barometer revealed the value of fraud cases for the first six months of 2002 has already exceeded its total value for the whole of 2001.

David Alexander, fraud investigation partner, said: ‘We anticipate this to continue over the coming year or two as cases that we expect to emerge due to the current tough economic trading conditions come to court.’

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