55 per cent of firms say they’ve been hit by crime

OTTAWA — More than half of Canadian firms report being victims of crime, although less than one-quarter think their company will be in future, say results of a global survey released Tuesday.

“This change in perception reflects companies’ increasing confidence in their risk-management systems,” PriceWaterhouseCoopers said in an analysis of its 2005 Global Economic Crime Survey, “or a sign of overconfidence.”

In fact, the proportion of Canadian companies that reported being victims of crime in the last two years rose to 55 per cent from 46 per cent two years earlier.

The proportion of Canadian firms reporting that they have been crime victims is also somewhat greater than the global average of 45 per cent.

However, as in Canada, the proportion of firms reporting fraud globally is up from 37 per cent two years ago, while the percentage expecting to be victims in future has fallen.

“Despite the fact that the number of reported cases seems to have grown on a global basis, companies’ concerns over the likelihood of falling victim to fraud have fallen since 2003,” the analysis noted.

A variety of factors may be behind the increase in reported crimes, it said. They include tighter market regulations which have led companies to be more vigilant, the introduction of new fraudriskcontrols as companies try to demonstrate good governance, and a reduction in the stigma attached to reporting fraud.

However, it may also be an increase in the amount of fraud committed, it added.

Steven Henderson, Canadian Investigations & Forensic Services Leader for PWC said in an interview he suspects the increase in confidence among companies that they won’t be victims in future reflects the combination of improved systems to prevent fraud, and a less tolerant attitude toward fraud among both management and workers.

The survey earlier this year of 3,634 generally larger companies from 34 countries, including 100 from Canada, found that the average reported loss to fraud was $1.7 million US.

“ Companies need to be aware that fraud can affect them in many ways — not always in direct financial losses,” Henderson said.

More than half of Canadian companies reported economic crime had a significant negative impact on morale and motivation, and over a third reported that the company reputation, brand equity and business relationships were also hurt, the analysis noted.

In Canada, the most common frauds were misappropriation of assets and misrepresentation of financial statements, each of which accounted for just over one-quarter, followed by false pretenses which accounted for 17 per cent.

More than 60 per cent also reported the perpetrators were from their own staff, that 80 cent were male, nearly half had a degree or higher education, just over a third were aged 31 to 40 and one quarter were senior management.

Accident or chance continues to play a significant role in the detection of fraud, it added. In Canada approximately one quarter of the cases were uncovered by either chance, internal or external tip off, while a further 10 per cent were uncovered by a whistleblower hotline. CanWest News Service