Respondents to the 2008 KPMG Fraud Survey found that organisations in the sector suffered proportionally higher levels of fraud than recorded in other industry groups with the average loss placed at about $A33,000.

“These figures are concerning,” KPMG Forensic partner Matt Fehon said.

“Whilst they are not of the magnitude reported in the financial services sector, which is expected, the expansion in the resources sector during the survey period [February 2006 – January 2008] reflects the difficulty organisations have in maintaining effective internal controls and effective oversight of remote locations.”

He added this was likely to increase in the current environment of contract withdrawals reductions, cost pressures and decreased performance for some companies.

The survey also revealed that while the level of fraud is high in the resources sector, the use of internal controls also made the sector more successful in detecting it.

This reflects the positive measures taken to mitigate the risk of fraud and the importance of having effective reporting mechanisms in place.

The survey showed 80% of fraud in the sector was committed by internal parties with greed ranking as a more common motivator than gambling, the main motivator for many other sectors.

Increased cost pressures will increase the risk of fraud occurring, and potentially for higher sums to be defrauded.

In the current environment there are increased risks of theft of confidential information, intellectual property, plant and equipment, as well as financial misstatement, due to variety of reasons including disgruntled or opportunistic employees.

“In order to protect against the risk of fraud organisations need to check that their internal controls, fraud risk management and reporting strategies are robust,” Fehon added.

“Too often the phase ‘prevention is better than the cure’ has been ignored during boom times. The effects now on a company can be catastrophic.”

The survey found the most common type of fraud suffered by respondents last year was theft of funds (57%) followed by theft of physical assets (30%).

Other schemes such as false invoicing (15%) and theft of plant and equipment (15%) were also prominent in the resources sector