Is the tooth fairy a fraud? | KPMG | ZA

Is the tooth fairy a fraud?

Is the tooth fairy a fraud?

Humans seem to be fascinated by fraud. Some do it and eventually, so it seems, believe that they have created magic. Others stand in shocked astonishment observing the demise of companies, ensuing court cases and media blazes seeking answers, pointing fingers and never arriving at a satisfactory explanation of the chaos left behind.


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We ask ourselves: How could this happen? Why did the auditors not pick up on such blatant behaviour? Who knew this was going on? What did we miss?

Most people have a very clear understanding of what is right and wrong. Are we not, after all, taught not to tell lies? Strangely enough, we as a global society are quite happy to teach our children about the tooth fairy. Why?

Children accept the unpleasant task of losing part of themselves with the ensuring ramblings of parents about a magical creature bringing money/ rewards in exchange for little treasures.

Is this fraud? Is this unethical? Or are we all just looking for a little bit of magic in a world that is hard to comprehend, even for adults?

Before it is said that everyone is now accused of being fraudsters, the simple analogy of the tooth fairy does create a number of interesting questions about fraud, which we will attempt to answer in this publication on corporate failures.

It must be understood that fraud does not always result in corporate failure, nor do corporate failures occur only as a result of fraud. However, in some the biggest corporate failures across the globe, fraud was involved.

Much research has been done globally to measure fraud, many articles have been published recommending additional mechanisms to prevent and detect fraud. Court sanctions of convicted fraudsters do not appear to deter and additional legislation and regulation appears to have little impact in reducing the occurrence of fraud and hence, corporate failures.


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Cornelia Niemand
Associate Director
M: +27 (0)82 718 8364

Estelle Wickham
Senior Manager
M: +27 (0)82 714 2788

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