Workplace fraud in Canada costs small and medium enterprises (SMEs) billions of dollars each year, according to a research report from the Certified General Accountants Association of Canada (CGA-Canada). Collective losses are estimated at $3.2 billion for 2010. Yet many firms are overlooking the problem or underestimating their vulnerability.
"The risk of workplace fraud is almost certain to rise as economic growth slows and more employees experience financial difficulties," said Rock Lefebvre, CGA-Canada's vice-president of research and standards and co-author of the report. "It's a genuine threat and companies need to be vigilant. It may be a case of pay now, for prevention, detection and response measures, or quite possibly pay later."
About 290,000 SMEs were victims of one or more instances of workplace fraud in the past year, found the report Does Canada Have a Problem with Occupational Fraud? The most common forms of fraud were misappropriation of inventory or assets and misappropriation of cash.
Despite this, 74 per cent of the 802 companies surveyed believe their exposure to occupational fraud is low, with 80 per cent having no response plan in place and 59 per cent undertaking no form of periodic risk assessment.
The harm done by occupational fraud goes beyond monetary damage, said Lefebvre.
"The financial loss is one thing but it's staff morale and management confidence that really take a hit," he said. "The reputation, value and public and client trust of these companies also suffer."
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