Employees Enemies Of Companies, Says KPMG

By John EremuA FRAUD survey by KPMG, an audit and consultancy firm, has over turned the organisational belief that employees are the most important resource in a company.The survey conducted in the East African countries of Uganda, Kenya and Tanzania showed that 68% of the 400 respondents pointed accusing fingers at the employees (non-management staff) as the major source of fraud in organisations.“The report indicates that a company’s biggest enemy are its employees. They are the largest source of fraud and financial losses,” KPMG’s forensic partner, Simon Kalenzi, said during the launch of the report at Sheraton Kampala Hotel yesterday.“The report reveals that 61% of the companies surveyed believe that fraud is a major problem in business today with 88% of the respondents having been victims of fraud during the past year. Seventy three percent of the respondents said fraud would increase in future due to economic pressures, criminals becoming more sophisticated, weakening of society values and inefficiency of the judicial system,” Kalenzi added.The function was attended by several business executives. The participants were addressed by Zahir Sheikh, a KPMG forensic expert and Silver Kangaho, the director of operations at the Inspectorate of Government.Kangaho hailed KPGM for the survey but refused to accept that low level employees were the biggest fraudsters.“Our experience is different, particularly with the local governments. In many districts, very high calibre staff are involved in fraud,” he said, citing classroom construction under the Universal Primary Education programme where authorities effect payments for work not done.Zahir said weak internal control and collusion between employees and third parties were the biggest contribution to fraud. He said the fear of negative publicity, lack of confidence in the judicial system and the inability of the police to apprehend criminals were pointed out as the main reasons why fraud was not reported to the authorities.Kalenzi said fraud threatens to derail the economic gains the East African countries have achieved.KPGM is a global network of professional firms providing assurance, tax, legal, financial and consultancy services in 152 countries.Ends