Home >News >India >63% independent directors expect fraud cases to rise in next 2 years: Deloitte

63% independent directors expect fraud cases to rise in next 2 years: Deloitte

Survey has revealed that cybercrimes and financial statement fraud are likely to be among the most common frauds to be experienced in the near future

2 min read . Updated: 06 Oct 2021, 04:13 PM IST Livemint

Around 57% independent directors said their board has established an effective FRM framework but around 22% indicated the need to increase awareness among employees on ethics, integrity, and reporting fraud or misconduct issues

Listen to this article

BENGALURU: About 63% independent directors believe fraud cases will rise in the next two years, according to a report by Deloitte Touche Tohmatsu India in association with the Institute of Directors.

Growing focus on ethics and corporate governance within organisations has increased the importance of the role of independent directors in being effective deterrents to fraud, mismanagement, and lapses in corporate governance.

The survey revealed that cybercrimes (23.90%) and financial statement fraud (20.96%) are likely to be among the most common frauds to be experienced in the near future. Around 36% of independent directors said organisations should focus on fraud prevention techniques to improve their fraud risk management (FRM) framework and minimise fraud risk.

Around 75% independent directors believe that they could play a significant role in preventing, detecting, and responding to fraud. Some 54% of them indicated the need to be better equipped to discharge their duties, which included specific trainings on FRM.

Around 57% independent directors said their board has established an effective FRM framework but around 22% indicated the need to increase awareness among employees on ethics, integrity, and reporting fraud or misconduct issues to improve the FRM framework.

Nearly a half (48%) of independent directors suggested that their organisations had a well-defined and clear incident response protocol to ensure swift actions upon fraud detection and its reporting.

"The survey findings reflect that fraud is no longer a phrase which is taboo. Our survey results brought to the forefront that independent directors are ready to be part of a board that has previously experienced/reported fraud. However, the need is for them to invest time and efforts in increasing the in-depth understanding of fraud risks for them to play a meaningful role in ensuring robust corporate governance," said Nikhil Bedi, partner and leader, Forensic, Financial Advisory, Deloitte Touche Tohmatsu India.