More than half of approximately 2,100 business professionals (56 percent) surveyed during a Deloitte webcast about reducing fraud risks think more financial statement fraud will be uncovered this year and in 2011, as compared to the last three years.  Almost half of those surveyed, 46 percent, point to the recession as the reason more financial statement fraud will be uncovered.

Moreover, it’s getting harder to assess financial statement fraud risks because of changes in the risk environment, according to 45 percent of survey respondents while only 11 percent of respondents believe the task is getting easier.

More than one-third (38 percent) of respondents stated that in the current economic environment, revenue recognition manipulation is the type of financial statement fraud of greatest concern. Meanwhile, 18 percent of respondents cited ‘big bath’ write-offs while expectations are low and 14 percent cited manipulation for debt covenant compliance purposes.

One half (50 percent) of respondents said the financial services industry will have the greatest percentage increase in financial statement fraud alleged by the SEC during 2010, as compared to 2009. This was followed by technology, media and telecommunications (14 percent), consumer business (12 percent), life science and healthcare (10 percent) and manufacturing (6 percent).

One-quarter (25 percent) of respondents believed that the action most useful to their organization for mitigating the risk of financial statement fraud would be training staff to recognize financial statement fraud.  Furthermore, 22 percent believed that improving the ‘tone at the top’ would mitigate the risk of financial statement fraud, while 22 percent believed that improving fraud risk assessments would be most useful to their organizations in this effort.

Further details are available at corporatecomplianceinsights.com.