The latest KPMG Fraud and Misconduct Survey has revealed Australian and NZ finance companies are more vulnerable to lending fraud and bogus insurance claims for the last two years.

The KPMG has surveyed about 200 public and private sector companies revealing that the level of fraud reported increased from $301 million to $345 million, moneymanagement.com.au showed.

The biennial survey also indicated fraud committed against Australia and New Zealand's top organisations doubled in the last two years, up from $1.5 million per organisation in 2008 to $3 million in 2010, with financial and insurance companies proving particularly vulnerable, said KPMG forensic partner in charge, Mr. Gary Gill.

Mr. Gill said this should be taken seriously because the survey only captures a small portion of the business population and the real fraud price tag could be more and in billions of dollars.

"Inside job"

The survey found that the financial and insurance services sector continues to be particularly vulnerable to internal and external fraud involving credit, lending claims, and insurance claims, which resulted in the loss of $273 million.

Mr. Gill said the lack of internal controls has allowed some employees to get away with the company's funds and, therefore stricter and tighter controls can prevent or detect irregularities and "inside jobs."

He cited that there was a "marked" increase in frauds involving the abuse of internet-based electronic funds transfer (EFT) facilities, which should have tighter controls to prevent employee switches of payment transactions intended for a vendor.

Mr. Gill urged finance companies to put up a more stringent electronic control that can monitor and easily detect such illegal transactions because 61 percent of cases showed that the money taken can no longer be retrieved in spite its discovery.