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Forensic Focus - March 2013

Cutting through the smoke and mirrors


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Welcome to the Forensic Focus March 2013 edition.

At the beginning of most years, often sitting around the BBQ with friends or colleagues, conversations in our line of work often gravitate toward asking questions like “so is fraud growing or are they just becoming more sophisticated?”.

The Serious Fraud Office realise assessing the scale of fraud in New Zealand is an important but vexed question with almost zero data to rely on. They have made significant steps in this area in trying to map the incidence of fraud and to measure the potential impact on the New Zealand economy. The results of this work are expected soon.

Expect the potential size of the impact of fraud and corruption on the New Zealand economy to be huge. It will be of telephone number proportions and will probably be so large that most people will shake their head in bewilderment - but it will almost certainly be close to the mark.

Since the global financial crisis there has not been a sudden outbreak of honesty in New Zealand. The incidence of fraud and size of reported fraud will continue to trend upwards just as it has over the previous 10 years. Nothing has changed.

In our view, there are two factors in play here. First, a country like New Zealand with such a low corruption index can only really at best hold that position or it will get worse. Idealistically, the former would be a brilliant outcome. Realistically, the latter is more likely. Second, the New Zealand economy and public service in particular is currently in a pattern where change, restructuring and uncertainty will be the norm for the next 1-3 years. Change and uncertainty is a great place for fraudsters to operate.

In 2011 in an interview I did for TVNZ , I mentioned that we were still to see exactly what else would flow out of the finance company era of activity and the global financial crisis. In 2012 the public finally started to see exactly what many insolvency practitioners, forensic accountants and regulators have been pouring over for the last few years. Expect to see a few more examples in 2013.

We hope you enjoy this edition of Forensic Focus.

Barry Jordan and the Team

 

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