Pakistan has no organisation or any agency to provide data or details about the corporate fraud in the country but frauds can be prevented through good internal control system. This was stated by Asad Ali Shah, who gave a detail presentation in a seminar on "Corporate Fraud" organised by the Institute of Corporate Secretaries of Pakistan (ICSP) on Thursday.
He provided the data of the United States regarding the corporate fraud and said that a survey showed that in 2004, companies lost 6 percent of their revenue. The Association of Certified Fraud Examiner, USA, conducted this survey.
Asad Shah said that the US companies lost 660 billion dollars last year. He said 59 percent fraud happens because of weak internal control. 95 percent companies reported employees' theft. If a company loses 1 dollar because of fraud, in fact it has lost 4 more dollars, he said. Losses caused by a manager are 4 times higher, while the losses caused by an executive 16 times higher than an ordinary employee, he said.
Asad Shah added that those who have no history of fraud commit majority of fraud. He said most of the frauds detected by the 60 percent tips of employees, 20 percent by customers and 16 percent vendors.
He said a good internal control system could prevent 50 percent of the fraud, adding that the internal control is the fastest growing method to control the fraud world-over. After the fraud in Enron and Worldcom, the importance of internal control has further increased, Asad said.
He also discussed various types of frauds and fraud triangle.