New Delhi, Mar 30: Losses due to frauds have been increasing exponentially and over 90 per cent of the financial frauds are detected by accident, according to a recent study by the Institute of Chartered Accountants of India (ICAI). The study on 'Detection of Frauds' has lucidly brought to light that the frauds in accounting were more due to "absence" of controls and the banking sector had the highest potential for frauds. Though the losses due to frauds could not be quantified, it said, "fraud incidents are not growing exponentially, but fraud losses are." "Over 90 per cent of the financial frauds are discovered by accident," the ICAI study said, adding that frauds in a computerised accounting environment could be committed at any state of processing input, throughput or output. However, it said the input frauds -- entering false and fraudulent data -- were the most common.

Stressing that fraud prevention was a matter of adequate controls, the study said, "accounting type frauds were caused more by absence of controls than by loose controls."

Frauds were committed for economic, egocentric, psychotic and ideological reasons and "of the four, the economic motive is the most common."

A report by the US-based association of certified fraud examiners had indicated that an average of six per cent of the gross receipts in an organisation in that country were lost on account of fraud, abuse or white-collar crime in 2000.

In dollar terms, the amount exceeds a staggering figure of 400 billion USD.

Bureau Report