Risk of corporate financial fraud against the backdrop of the pandemic underestimated among Quebec business leaders

MNP survey of business owners and executives in province covers range of perceptions around fraud

Montréal, February 15, 2022 - Eighty percent of Quebec business owners and senior executives believe that the risk of financial fraud within their company is very low to moderate when viewed against the backdrop of the pandemic.

This is one of the key findings from a survey conducted on behalf of national professional services firm MNP by Callosum among 250 business owners or senior executives of businesses in Quebec, representing all types of industries across the province.

“What is most surprising about these findings is the perception of the level of fraud risk. This fraud risk is significantly underestimated based on our experience. This can lead to unfortunate consequences. This risk can be greatly reduced with appropriate measures, especially now in the midst of the pandemic,” says Corey Anne Bloom, Partner and Eastern Canada Leader (Quebec, NCR and Atlantic Canada) of Forensics, Investigations and Disputes at MNP.

About three out of four respondents (73 percent) answered that they thought that the pandemic had probably not affected the level of risk of financial fraud or had reduced such risk.

In fact, as Simon Gaudreau, Manager of Forensics at MNP in Montreal, explains, this opens the door to new and future fraud; the financial pressure, the transformation of business models, changes to logistics and working methods in connection with the pandemic are causing major upheavals, for companies and for individuals alike. While all eyes turned towards a return to normalcy, Quebec executives will need to be aware of the risks in order to preserve the financial health of their companies.

The MNP survey indicated that embezzlement is identified amongst the lowest perceived risk by business owners, along with deliberate errors in financial reporting and fraudulent disbursements. At the same time, respondents to the MNP survey identified embezzlement as the most common type of financial fraud among respondents who have been a victim of fraud.

Nearly one in five companies surveyed have been a victim of financial fraud in the past. These are often medium-sized companies (100 to 500 employees). More than half (54 percent) of the affected companies have been victims of fraud more than once.

Companies that have been victims of fraud in the past perceive themselves as more prepared for the possibility of another financial fraud, yet the survey results reveal that some have not taken appropriate measures to reduce the risk. Overall, nearly one in four respondents said their company was not well prepared to detect, deter and respond to financial fraud.

Interestingly, 10 percent of respondents were unable to provide details on their company’s preparedness against financial fraud. In addition, one quarter of companies have never conducted an external review of their fraud risks, and one quarter has never provided anti-fraud training to their employees.

“These misconceptions about fraud put companies at risk, as they increase the likelihood of blind spots and gaps in their anti-fraud management,” says Bloom when summarizing the overall survey results. “The pandemic has caused many organizations to look at managing their business in the shorter term. But it is important that as we emerge from the past two years that Quebec business leaders take a longer-term view of preparing their businesses to combat financial fraud.” 

About MNP

National in scope and local in focus, MNP is one of Canada’s leading professional services firms – proudly serving individuals, businesses, and organizations since 1958. Through the development of strong relationships, we provide client-focused accounting, consulting, tax and digital services. Our clients benefit from personalized strategies with a local perspective to fuel success at every stage.

Information

For more information, please contact:

Corey Bloom, CPA, CA, CA•IFA, CFE, CFF
Partner, Eastern Canada Leader (Quebec, NCR and Atlantic Canada), Forensics, Investigations and Disputes  

[email protected] or 514.228.7863