India Inc ill-equipped in handling frauds: Deloitte

Indian corporate houses are not equipped to handle frauds and instances of fraud are only set to rise over the next two years according to Deloitte India.Whether it's a company that occupies a couple of floors in a swanky building or smaller establishments without the fancy digs - corporate India is just not ready to fight off fraud, not even in its traditional forms like bribery, corruption and theft. Surprisingly, not many firms have even basic systems in place to identify themselves as victims of fraud, let alone prevent such attacks.Of the 400 companies surveyed by Deloitte India, only 3 percent said they suffered fraud losses of over Rs 10 crore and about 38 percent said they had suffered no losses what-so-ever, whereas 23 percent said they were unable to quantify the losses due to fraud.This is more alarming, when you consider that as per the latest report by the Association of Certified Fraud Examiners, companies lose on average 5 percent of revenues due to fraud. No surprise then, that the Deloitte survey showed that nearly 56 percent of the respondents believe instances of fraud will only rise over the next 2 years.Rohit Mahajan, Senior Director & Head - Forensic Services,Deloitte said companies have nothing in place to mitigate frauds.One big reason for this, the survey found, was that corporate house view compliance with provisions in the new Companies Act related to fraud risk management as a cost rather than an investment that will drive business growth. Also, most companies were unaware of the new-age risks their businesses face. For instance, 69 percent of the respondents were unsure about the risk from social media fraud. 60 percent felt e-commerce was not risky and did not have comprehensive processes to mitigate this fraud.Corporate India clearly has its work cut out for it. Especially given that the new Companies Act not only defines the term "fraud" for the first time, it also extensively deals with penalising such fraudulent activity, including pulling up not just the company but also senior management for lapses in security protocols.