This spring, accounting firms, consultancies Economics, and professional forensic associations are harvesting seasonal fraud surveys packed with criminal amounts of eye-opening information.
Here are some insights (with statistical support) from the ACFE report Economics, which indicates that companies around the world lose about 5 percent of their annual revenues to fraud:
• Fraud schemes are extremely costly. The median loss caused by the occupational fraud cases in the ACFE study was $160,000. Nearly one-quarter of the frauds involved losses of at least $1 million.
• Schemes can continue for months or even years before they are detected. The frauds in the study lasted a median of 18 months before being caught.
• Tips are key in detecting fraud. Occupational frauds are much more likely to be detected by tip than by any other means. This finding has been consistent since 2002, when the ACFE began tracking data on fraud detection methods.
• High-level perpetrators do the most damage. Frauds committed by owners and executives were more than three times as costly as frauds committed by managers and more than nine times as costly as employee frauds. Executive-level frauds also took much longer to detect.
Whether or not North American risk management efforts – and the rise (or rebirth) of formal enterprise risk management programs – are putting a crimp on the corporate fraud crop remains to be seen (and will be something I blog on soon).
Fraud lurks everywhere these days, especially in my inbox.
This ought to plant at least a couple of fraud-management seeds in your mind, including thoughts about the health of your whistle-blowing process. ###
In the meantime, the results from Ernst & Young’s “11th Global Fraud Survey” and The Association of Certified Fraud Examiners (ACFE) “2010 Report to the Nations on Occupational Fraud & Abuse” are available to prying eyes.
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