These frauds are seen replacing supplier kickbacks and bribery as the biggest risks that organisations currently face, KPMG said in its India Fraud Survey report.
Almost 60 percent of respondents, compared with about 39 percent in the last survey in 2006, have experienced fraud in their organisation in the last two years, the survey found. The financial sector was perceived to be the most vulnerable to frauds, followed by real estate/infrastructure and IT/ITeS sectors.
"The cost of fraud to businesses is difficult to estimate because not all fraud and abuse is discovered, not all uncovered fraud is reported, and civil or criminal action is not always pursued," it said.
About 70 percent of the respondents said it was important to conduct integrity due diligence on senior management and strategic alliance partners to help control the risks. More than 60 percent of the respondents in the survey said their organisations did not have a complete understanding of the various risks of frauds faced by them and lacked effective internal control mechanisms to mitigate these risks.
It found almost a third of all frauds were detected by accident or through anonymous letters and not by the company's internal controls framework. However, about 72 percent of the respondents said their companies carried out background checks on new recruits.