American Chamber of Commerce in Romania
15 Years in Romania
Honored with Business Superbrands Award 2007/2008
European Council of American Chambers of Commerce in Europe
Foreign Commercial Service of the U.S. Embassy
U.S. Chamber of Commerce
Fighting fraud during and after the financial crisis
09/01/2011 I Source KPMG Romania
• Detected fraud increased in many companies during 2009-2010 although underlying rates of fraud did not change;
• Increase in detection commonly attributed to increased focus on fraud risk management following the financial crisis;
• 67% of Romanian organizations were motivated by the crisis to invest in enhancing internal control mechanisms to improve fraud risk management;
• 43% of our CEE participants are expected to make further enhancements over the next two years
Many companies reported an increase in detected fraud during 2009-2010, according to a KPMG survey of managers in countries across Central and Eastern Europe. Most respondents indicated that the increase was due to a heightened focus on fraud risk management during the crisis and not due to an increase in underlying levels of fraud. KPMG’s Forensic practice surveyed managers in organizations across seven countries in Central and Eastern Europe (CEE): Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, and Romania.
Jimmy Helm, Head of KPMG Forensic in Central and Eastern Europe, comments:
“The survey results would seem to support the common observation that fraud tends to bubble to the surface more frequently during times of recession than during times of growth. The increased focus apparently placed by organizations on fraud risk management in the wake of the crisis is consistent with the need to better control costs at a time when resources were scarce.”
While most of the types of fraud which increased were types commonly encountered in a commercial environment, it is notable that some 45% of CEE respondents (Romania: 43%) reported increases of ‘Theft or leakage of sensitive information’ over the period of the review.
Kemal Özmen, Director, KPMG in Romania, and Head of KPMG Forensic in Romania, the Balkans and Serbia comments: “We’ve seen an increase during the last few years of companies approaching us to assist in investigating information theft and leakage. Clearly there is a balance to be struck between protecting information assets against misuse and enabling them to be leveraged for the benefit of the business, but many companies are simply not giving the issue adequate consideration. Arguably your information is even more valuable to competitors in tough economic times, and restructuring within many organizations has created disgruntled employees with the opportunity and motivation to assist them in obtaining it.”
67% of Romanian respondents indicated that their organizations had been motivated by the crisis to invest in enhancing internal control mechanisms to improve fraud risk management, and 43% believed that their organization would make further enhancements over the next two years.
Kemal Özmen comments: “It is interesting to note that most of the enhancements made immediately following the crisis were directed towards fraud prevention rather than detecting or responding to fraud that had occurred. While prevention, detection and response are all vital to an effective fraud risk management strategy, well-chosen and well-implemented prevention measures certainly have the greatest capacity to improve an organization’s bottom line.”
About KPMG
KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 150 countries and have 138,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG in Romania and Moldova operates from six offices located in Bucharest, Cluj-Napoca, Constanta, Iasi, Timisoara and Chișinău. We currently employ more than 600 partners and staff; Romanians and Moldovans as well as expatriates.
• Increase in detection commonly attributed to increased focus on fraud risk management following the financial crisis;
• 67% of Romanian organizations were motivated by the crisis to invest in enhancing internal control mechanisms to improve fraud risk management;
• 43% of our CEE participants are expected to make further enhancements over the next two years
Many companies reported an increase in detected fraud during 2009-2010, according to a KPMG survey of managers in countries across Central and Eastern Europe. Most respondents indicated that the increase was due to a heightened focus on fraud risk management during the crisis and not due to an increase in underlying levels of fraud. KPMG’s Forensic practice surveyed managers in organizations across seven countries in Central and Eastern Europe (CEE): Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, and Romania.
Jimmy Helm, Head of KPMG Forensic in Central and Eastern Europe, comments:
“The survey results would seem to support the common observation that fraud tends to bubble to the surface more frequently during times of recession than during times of growth. The increased focus apparently placed by organizations on fraud risk management in the wake of the crisis is consistent with the need to better control costs at a time when resources were scarce.”
While most of the types of fraud which increased were types commonly encountered in a commercial environment, it is notable that some 45% of CEE respondents (Romania: 43%) reported increases of ‘Theft or leakage of sensitive information’ over the period of the review.
Kemal Özmen, Director, KPMG in Romania, and Head of KPMG Forensic in Romania, the Balkans and Serbia comments: “We’ve seen an increase during the last few years of companies approaching us to assist in investigating information theft and leakage. Clearly there is a balance to be struck between protecting information assets against misuse and enabling them to be leveraged for the benefit of the business, but many companies are simply not giving the issue adequate consideration. Arguably your information is even more valuable to competitors in tough economic times, and restructuring within many organizations has created disgruntled employees with the opportunity and motivation to assist them in obtaining it.”
67% of Romanian respondents indicated that their organizations had been motivated by the crisis to invest in enhancing internal control mechanisms to improve fraud risk management, and 43% believed that their organization would make further enhancements over the next two years.
Kemal Özmen comments: “It is interesting to note that most of the enhancements made immediately following the crisis were directed towards fraud prevention rather than detecting or responding to fraud that had occurred. While prevention, detection and response are all vital to an effective fraud risk management strategy, well-chosen and well-implemented prevention measures certainly have the greatest capacity to improve an organization’s bottom line.”
About KPMG
KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 150 countries and have 138,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG in Romania and Moldova operates from six offices located in Bucharest, Cluj-Napoca, Constanta, Iasi, Timisoara and Chișinău. We currently employ more than 600 partners and staff; Romanians and Moldovans as well as expatriates.
