Trying times have a way of driving staffers to take drastic measures. So, now is the time to watch out for tainted performance metrics.
And struggling companies are more likely to be busted for these indiscretions.
In fact, a recent Deloitte Forensic Center study says companies that have filed for bankruptcy are three times more likely to deal with regulators than those that haven’t filed.
According to the study, the Securities and Exchange Commission (SEC) accused 9% of bankrupt companies with fraud on their financial statements from 2000-07. Only 3% of non-bankrupt companies met the same fate.
In a down market, even the most stable staffers can crumble under pressure and “enhance” numbers to make it appear that targets and budgets were reached.
Ramp up your fraud controls by testing the effectiveness of the measures you have in place and looking for ways to improve them.
Another effective weapon against fraud: Make sure the goals you set for the new year are realistic, so employees aren’t tempted to fudge data.