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February 22, 2017 – Incidents of fraud are rising every year, yet an overwhelming majority of Canadian business and C-suite executives say they are confident in their ability to prevent it.
The disconnect could be due to a dangerous combination of overconfidence and naiveté when it comes to fraud detection and prevention, according to a new Ipsos survey conducted for national accounting, tax and business consulting firm MNP LLP.
The survey revealed that half of Canadian businesses either suspect or know for certain that their business has experienced fraud or scams in the last year. Despite the fact that so many recognize it is occurring, an overwhelming majority (eight in ten) say they are confident in their ability to prevent it. Another almost ninety per cent feel at least somewhat equipped to deal with it. Survey respondents were twice as likely to identify fraud as a serious issue in the wider industry in which they work than in their own place of business.
Most businesses are operating with a false sense of security, warns Greg Draper, former RCMP investigator and current Vice President of Valuations, Forensics and Litigation Support at MNP.
“This kind of ‘it won’t happen to me’ optimism puts the advantage in the hands of criminals and makes Canadian businesses tremendously vulnerable,” says Draper, who leads a national team of specialists in workplace fraud mitigation. “The reality is that no organization is immune from either internal or external fraud.”
The Canadian Anti-Fraud Centre agrees. Last year the federal agency saw a forty per cent increase in the number of victims of wire fraud, which involves electronic communications like email scams, one of the most common types of fraud experienced by businesses.
“Fraudsters will go to great lengths to assume the identity of company executives or trusted vendors; spoofing company email messages, researching employees who are responsible for money management and using language specific to the company being targeted,” says Lynn Danis, Criminal Intelligence Analyst with the Canadian Anti-Fraud Centre. “Victims range from large corporations to small businesses which is why it is critical all organizations create a proactive security-vigilant culture. Ultimately, fraud prevention falls on the business.”
Draper adds there is a “giant denial” among Canadian businesses when it comes to preventing fraud. Two thirds of survey respondents describe their businesses attitude to fraud and scams as proactive.
“Often times we see businesses who come to us after they have been compromised but they don’t know how or why it has happened,” says Draper. “They may have had security awareness and fraud training processes in place but sophisticated scammers or even internal employees can find points of vulnerability. They realize they were not as equipped to deal with it after the dollars go out the door.”
Despite the rising occurrence of fraud in Canada, for the majority of respondents, concern about this type of crime has held steady for the past two years.
“Fraud is a serious threat no matter the size or the industry of the organization. All businesses must take preventative measures utilizing best practices, training and technology. When you consider the financial and reputational risks, it is clearly worth the effort.”
Backgrounder on survey insights included.
About MNP LLP
MNP is a leading national accounting, tax and business consulting firm in Canada. We proudly serve and respond to the needs of our clients in the public, private and not-for-profit sectors. Through partner-led engagements, we provide a collaborative, cost-effective approach to doing business and personalized strategies to help organizations succeed across the country and around the world.
For more information, visit www.MNP.ca.
Angela Joyce, Media Relations
e. [email protected]
At first glance, Canadian small business owners and C-suite executives are reasonably confident about their workplace’s ability to detect and prevent fraud or scams, and tend to see it as well equipped to deal with fraud when it occurs.
Dig a little deeper, however, and it soon emerges that fraud is a reality of doing business for many.
Other key survey insights include:
Experience with fraud or scams: Half of respondents either suspect or know for certain that their business has experienced fraud or scams in the past 12 months. Those with definite first-hand experience are more likely to have seen it from an external source (19%) than an internal one (13%). This leaves about one in three respondents who think it’s possible their business may have been exposed, though they can’t know for sure, while half say it definitely hasn’t happened.
C-suite executives and respondents from larger businesses are more likely to have experienced fraud than small business owners or those working in businesses with fewer than 100 staff.
Perception of fraud risks: Respondents are twice as likely to see fraud as a serious problem within the wider industry in which they work than in their own place of businesses. Half of respondents (50%) believe there is at least a little bit (41%) or even quite a lot (9%) of fraud at their business.
Dealing with fraud and scams: An overwhelming majority of respondents think their business is at least somewhat well equipped to deal with fraud and scams, with those in the financial sector most likely to feel equipped. That said, one in ten (11%) Canadian small business owners and C-suite executives say their business is not equipped to deal with fraud or scams, and only 41% say they’re ‘very well equipped’, leaving room for improvement for most.
Concern about fraud and scams: For half of respondents, concern about fraud and scams has held steady for the past two years. Meanwhile, nearly four in ten (37%) say they’re more concerned now, with those who feel their business isn’t well equipped to deal with a fraud scenario being significantly more concerned about it. Fourteen per cent say they are less concerned now than they were two years ago.
An increased awareness of the different potential sources of fraud or scams dominates as a cause for concern, cited by more than half of those whose concern has increased. Online and external threats are causing more concern than internal ones, while one in three respondents say they’ve grown their business and see themselves as more susceptible to risk as a result.
Attitude toward fraud and scams: A solid majority of respondents – two in three – describe their business’ attitude to fraud and scams as proactive, while one in three say their business is more likely to deal with fraud reactively, after the fact. Those well equipped to deal with fraud and scams are, unsurprisingly, the most likely to consider their business proactive.
Fraud and scam prevention: The vast majority claim they are confident their business can prevent frauds and scams from internal sources like internal employees creating false business transactions (86%), an internal employee stealing money or materials (84%) or an internal employee stealing confidential business data (81%). Confidence is slightly weaker in the face of external fraud sources like external online hackers but still eight in ten (80%) say they are confident in their business’ ability to prevent this type of threat.
Fraud and scam detection: Confidence in businesses’ ability to detect fraud and scams is high, though nearly one in four say they aren’t confident about detecting external threats from online hackers. Forty per cent are ‘very confident’, leaving 60% recognizing there’s room for improvement.
About the Survey
The survey was conducted by Ipsos on behalf of MNP LLP between January 17 and January 26, 2017. For this survey, Ipsos conducted a quantitative online survey of two distinct sample groups: Small Business Owners (SBOs) of businesses of 5-99 employees (n=1,000); and C-Suite Executives at businesses of 100+ employees (n=100).
The precision of Ipsos online surveys are calculated via a credibility interval. In this case, the total sample is considered accurate to within +/- 3.4 percentage points, 19 times out of 20, had all Canadian SBOs and C-suite executive been surveyed.
Categories:Valuation, Forensics and Litigation Support
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