Most Corporate Fraud Found by Luck, Study Finds

Financial fraud is still on the rise across the globe, a new study has found, and even though tough new regulations like the Sarbanes-Oxley Act are meant to improve corporate governance, most fraud is still found by chance.

Reuters is reporting that the study from PriceWaterhouseCoopers (PWC) found that financial fraud has increased by 22 percent in the last two years. Forty-five percent of companies who responded said they detected incidents of fraud, which is up from 37 percent in 2003, Reuters says.

The survey also found that the most common methods of discovering financial fraud are still accidental, like calls to hotlines or tips from whistle-blower employees. “Economic crime remains difficult to detect, despite everybody’s best efforts to invest in internal controls,” Steven Skalak, Global Investigations Leader at PWC told Reuters.

Reuters says the study found that fraud was detected by chance in more than a third of the cases, while internal audits found the fraud 26 percent of the time. It also found that larger companies are more likely to both experience and detect fraud.