According to the just released PricewaterhouseCoopers' Global Economic Crime Survey 2003, 50 percent of all economic crime detection came from internal or external investigations and audits. Another 36 percent of economic crime detection came from whistleblowers.

Produced by the law firm of Wilmer, Cutler & Pickering, the survey is based on more than 90 interviews with chief executive officers, chief financial officers, and those responsible for detecting and preventing economic crime in the largest U.S. companies. It is the first survey of its kind since the passage of the Sarbanes-Oxley Act.

Overall, the survey revealed that economic crime in the U.S. is prevalent -- more than one third of U.S. respondents to the survey reported significant economic crimes during the previous two years -- and is viewed as likely to increase over the next five years.

Most worrisome to survey participants is financial misrepresentation, which respondents believed to be prevalent in half of all companies. However, the survey sponsors point out that the actual instances of this crime was reported by only two percent of respondents, suggesting that the media attention surrounding some of the high-profile cases of financial misrepresentation in the U.S. has exaggerated the perceptions of the instance of financial misrepresentation.

Asset misappropriation, according to respondents, is prevalent at an incidence of 25 percent, followed by cybercrime at an incidence of eight percent.

Other findings:

• Economic crime is consistently harmful to a company's intangible assets. More than 75 percent of the incidences of economic crime had a negative impact on the company's reputation and on staff morale and motivation, in addition to damaging business relationships. 
  
  
• Confidence in controls appears to be misplaced in comparison with how economic crimes are actually discovered. Ninety-five percent of respondents believe they have adequate risk management systems. Yet respondents reported that risk management systems detected only about one-third of the instances of economic crime, suggesting that internal systems are co-opted, circumvented or overridden in a majority of instances of economic crime. 
  
  
• Seventy-six percent of U.S. respondents have some form of insurance but only 37 percent report recovering damages through insurance, and these recoveries are small.

Copies of the U.S. and Global Economic Crime Surveys are available to view and download online at: www.wilmer.com.