With more than 40 per cent of surveyed Australian businesses reporting they had been victims of fraud, and its average cost doubling in the last six months alone, forensic accounting experts from around the world will come together next month (October) to discuss the latest techniques to curb the growing epidemic.
More than 70 accountants and academics will take part in the Forensic Accounting Teaching and Research Symposium at Bond University on the Gold Coast on 13-14 October, and share their insights on new fraud detection models.
Bond Business School Assistant Professor, Dr Adrian Gepp, said both the frequency and average cost of fraud had skyrocketed, with cybercrime and so-called CEO fraud, where scammers impersonate executives via email, among the driving forces.
Fraud costs Australian businesses $74 billion each year, with Queensland businesses accounting for $14 billion alone, the Report To The Nations by international anti-fraud organisation, Association of Certified Fraud Examiners, shows.
The report also revealed world-wide organisations lost an average five per cent of revenue annually to fraud, draining an estimated $3.7 trillion from the global economy.
Dr Gepp said, at the same time, many businesses, particularly small businesses, were oblivious to the high potential to be targeted.
"A fraud survey by KPMG found that while many businesses reported being the victims of fraud - at a significant 43 per cent - only a small number, just 15 per cent, acknowledged they themselves were at risk - so there's a disproportionate view of their own exposure to fraud," he said.
"That's a problem, because it means many businesses are unprepared to detect and deal with fraud - and the quicker it is detected, the better their chances of minimising losses.
"History shows if fraud is detected within six months, then the average loss is $45,000. However, if it goes unnoticed for more than 60 months, the median loss is 18 times higher - a staggering $850,000.
”Fraud is a problem across all business sectors, but small businesses are often hit hardest because the loss has a bigger impact on their bottom line.
"The funds lost to fraud schemes are very rarely recovered in full and there is evidence that fraud increases the likelihood of a company failing."
Dr Gepp said businesses would benefit from being better informed about fraud and the decision-making models that could be implemented to limit their exposure.
He has developed cutting-edge statistical modelling and machine learning techniques - a method of data analysis that automates analytical model building, which have proven to be more accurate than existing models in detecting fraud in the financial statements of companies.
"We encourage all businesses to put methods in place to detect fraud. The latest statistical modelling techniques have proven to be an important tool to achieve this," he said.
"At the same time, businesses need to recognise that implementing these data analysis models adds a level of security, but isn't the only solution. The models should complement but not replace people, as information provided by those associated with a business continues to be a highly effective way of detecting fraud.
"In fact, it is estimated 39 per cent of fraud is detected via 'tips' from employees, customers and suppliers and when there is a dedicated 'hotline' in place, this increases to about 47 per cent, so educating the key people businesses deal with is vital.
"The first step is always to acknowledge that you are at risk and to be prepared.
"Consider who you do business with, know who has access to each aspect of the business and understand that trust is not a control system.
"There needs to be sensible incentives for reporting potential issues and a culture that stems from the top of acknowledging and responding to any potential issues."
This year marks the fourth time the Forensic Accounting Teaching and Research Symposium has been held since 2009. Highlight presentations include:
Thursday, October 13:
- 1.20pm-2.30pm: The Future of Forensic Accounting: A panel presentation featuring the role of technology, ethics and more: Nikki Scott-Smith (Deloitte Forensic partner), Sharlene Anderson (Veritas Corp director), Associate Professor Bryan Howieson (University of Adelaide), Professor Ellie Chapple (QUT)
Friday, October 14:
- 8.40am-9.30am: Panel Discussion on Different Perspectives on Fraud: Len Scanlan (former Auditor-General of Queensland), Assistant Professor Adrian Gepp (Bond University), Professor Keitha Dunstan (Bond University, former Commissioner of the New Zealand Securities Commission)
- 9.30am-10.10am: Big Data in Accounting and Finance: Dr Martina Linnenluecke (UQ), Professor Tom Smith (UQ)
- 12.05-1.10pm: Lunch with speaker Sally Ernst, co-founder of the UK and Australian Cyber Security Network, on Cyber security: a management science and innovation perspective.
For further information on the symposium and to register, visit bond.edu.au/fatrs