Fraud threat looms large over CFOs

Johannesburg – South African CFOs, like their African and global counterparts, are increasingly worried about personal liability from fraud, bribery and corruption in their firms.

This is one of the key findings reported in the Ernst & Young 11th Global Fraud Survey, which was released on Wednesday.

Ernst & Young conducted its survey among 1 400 CFOs and heads of internal audit, legal and compliance in major companies in 36 countries across the world.     

Some of the key findings are as follows:

• 38% of South African respondents reported recent experiences of fraud, compared to 18% in the Middle East and the rest of Africa and 16% for the rest of the globe.    
  

• An even more startling finding is that the proportion of respondents from Western Europe who have recently experienced a significant instance of fraud has doubled in the past two years from 10% to 21%.      
  

• Compared to their African and global counterparts, only 68% of SA respondents believe that internal controls can effectively mitigate fraud risk, as compared to 70% and 74% for the respective regions.       
  

• South African directors have more faith in encouragement and protection of whistleblowers as a deterrent than their African and global counterparts; 58% of SA respondents as compared to 42% of global respondents believe in the efficacy of whistle-blowing.
  

"As South Africa and the world's economy pulls out of an economic downturn, new risks will emerge in an ever-changing environment," said Brenton Steenkamp, director for fraud investigation and disputes service at Ernst & Young South Africa.

"Fraud and corruption is one of these risks. It erodes the fundamental principles that support the achievement of business success. The fight against fraud should be considered a business imperative which contributes to improved operating performance and, ultimately, a better bottom line."