Fraud Prevention and Detection

September 12 - According to a new study by BDO Seidman, 37% of top executives at U.S. private equity firms have been exposed to corporate fraud through their investments and 40% of these investors say the impact on their investment return was significant. Fifty-nine percent of those exposed have faced instances of fraud worth $1 million or more. Nearly one third (29%) would be willing to pay a higher price (a median of 5% more) for a company that had a comprehensive anti-fraud program in place.

The BDO Consulting Corporate Anti-Fraud Study examined the opinions of partners and other senior executives at 100 private equity firms throughout the United States regarding their perceptions of the seriousness of corporate fraud among U.S. companies, the risk of fraud to their investments, how important anti-fraud measures are to them, and which measures they consider the most effective in preventing fraud.

The study also noted that private equity investors tend to focus on common and traditional anti-fraud techniques. They place the highest value on:

·  Conducting criminal and other background checks on potential employees (72%)

·  Maintaining a Board and Audit Committee with oversight responsibilities for preventing and detecting fraud (62%)

·  Monitoring and updating anti-fraud controls (60%)

·  Timely and well-communicated policies regarding appropriate behavior (56%)