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CFOs of Private Equity Firms Emphasize Fraud Prevention, Detection

CFOs of Private Equity Firms Emphasize Fraud Prevention, Detection

A new survey suggests chief financial officers of venture capital and private equity firms are becoming very focused on preventing and detecting fraud within their businesses.

The study, which was conducted by global business investigations firm Corporate Resolutions, Inc., included responses from CFOs of various firms across the U.S. A total of 39 percent of all respondents said they had encountered fraud during their tenure, while 81 percent noted they had not invested in a certain company due to suspected integrity problems or fraud.

To combat these issues, 67 percent noted they had anti-fraud measures in place when the incidents occurred, and 91 percent said they conduct background checks on employees to help prevent such problems.

"After Madoff and Stanford, the financial community is waking up to the need to show transparency and do their homework before investing," Ken Springer, founder and president of Corporate Resolutions, said in a release. "It’s not surprising to see CFOs in the private equity world focusing on anti-fraud controls as a priority."

The Wall Street Journal reports fraud issues become more difficult to control as firms expand into overseas markets.