Q8- Has there been an instance, where you were aware of some wrongdoing but you did not report it to the concerned person in your organization? for credit.
The results obtained from the KPMG India Fraud Survey Report 2008 [ 4 ], are as follows:
Yes 28 %
Fraud is a major problem in India
No 72 % |
49 % |
3 %
11 %
37 %
|
Disagree Somewhat disagree Somewhat agree |
|
|
|
Agree |
Q9- Do you feel the need to have a formal mechanism to report misconducts / grievances? Has your organisation experienced any fraud
No |
40 % |
60 % |
Yes
No
|
Yes |
|
|
|
0.00 % 20.00 % 40.00 % 60.00 % 80.00 % 100.00 % |
|
|
|
5.0 SURVEY RESULTS OF SECONDARY RESEARCH
According to a survey done by India Forensic Consultancy Services [ 3 ], Pune, at least 1200 out of 4867 companies listed on the Bombay Stock Exchange and 1288 companies listed on the National Stock Exchange as on March 31, 2007, including about 30 companies listed in the benchmark Sensex and Nifty indices had fudged their financial reports.
The study investigated 11 sectors, viz. real estate, retail, banking, manufacturing, insurance, public sector undertakings, mutual funds, transport and warehousing, media and communications, oil and gas and information technology. The manufacturing sector, which contributes about 28 per cent of India ' s gross domestic product, is the one most affected with fraud mainly due to the peculiar nature of the business and the procedural complexities inherent in this sector. Real estate and public sector undertakings came second.
The motive for committing accounting statement frauds, according to 73 per cent of 340 chartered accountants who were respondents to the findings of the study, was to exceed expectations of stock market analysts. Other reasons for the fraud include credit-hungry firms manipulating application data in order to qualify
! Nearly half of the respondents( 49 percent) believed that they have communication channels in place for anonymous reporting of suspected fraud and misconduct. However, only 15 percent of the frauds were detected through anonymous reporting. This indicates that even if organizations believe that they have a good reporting mechanism, the employees may not necessarily feel safe in reporting misconduct.
6.0 ROLE OF WHISTLE BLOWING IN ENHANCING CORPORATE GOVERNANCE
By analyzing the KPMG report, we realize that a majority of the employees feel that most white collar crimes happen from within an organization than from an external body. Organizations are huge and it is difficult for just a few people to ensure that fair and honest practices exist across functions in the organization.
The best and most efficient method to ensure that fraudulent happenings are exposed is by involving the employees of the organization. The people working in the company can be encouraged to report crime, malpractices or theft that happens in their department to an autonomous body which functions primarily for this purpose.
Let us now look at the type of people who become whistle blowers. Interestingly, research shows that whistle blowers are not unhappy or disgruntled employees. Rather they seem to score high on conscience. They think
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