PwC survey flags rising fraud at India Inc

Nearly 60% of Indian companies faced financial or economic fraud in the past two years, consultancy PwC said in a survey, while pointing out that the number is 18 percentage points higher than the global average of 41% and 7% higher in India when compared with the 2022 edition of the same survey.

Among the types of fraud, those related to procurement have overtaken customer fraud as a primary concern, with 50% of respondents calling it as a major issue, according to PwC’s Global Economic Crime Survey 2024–India Outlook.

Procurement fraud involves illegal activities in the purchasing process, such as inflating invoices, collusion with suppliers, kickbacks, or manipulating bids, which result in financial losses for an organization.

“In our 2022 survey, customer fraud led the list, reported by 47% of companies. However, this year’s findings reveal a shift with procurement fraud now emerging as the primary concern,” Puneet Garkhel, partner and deader, forensic services, PwC India, said in a statement.

“Historically, one of the oldest economic crimes, procurement fraud involves illegal manipulation of procurement processes for financial gain. This year, half of our respondents in India identified it as their major worry. Being one of the most disruptive economic crimes, procurement fraud cuts across industries and processes. Therefore, maintaining the integrity of the procurement process is of paramount importance as the reputation of a company rests on it,” Garkhel said.

Corruption and bribery were found to be disruptive economic crimes by 26% of respondents. Despite this, 34% of companies did not have anti-corruption audits for third-party vendors, the survey found.

The survey also showed concerns over forced labor across sectors, with only 16% of Indian firms addressing it.

“In India, 16% of companies are actively addressing this risk while 24% evaluating it, 26% are unaware of its importance within their organizations and 19% recognize it but lack assessment plans. Non-compliance could result in harsh penalties, market restrictions and product bans,” the survey noted.

PwC also highlighted gaps in real-time fraud detection and urges companies to improve compliance efforts and environmental, social and governance (ESG) responsibilities.