♪♫ At the end of 2016 Forensic Accounting Services, LLC
Sent 12 beguiling fraud facts unto me… ♫♪
Tips were the number 1 method of detection for occupational fraud by a wide margin – solid motivation to set up an anonymous tip line at your organization.
Corruption was one of the 2 most common types of fraud in every region surveyed including North America, Africa, Europe, The Middle East, Latin America, and Asia.
Only 3% of frauds in Southern Asia were perpetrated by women, the smallest number of any region. The highest percentage of female fraudsters by region, 44.3%, was in the United States.
External audit only detected fraud in 4% of U.S. cases, though many organizations rely heavily on external audit for fraud detection.
The average organization loses 5% of revenues in a given year as a result of fraud.
Between 2012 and 2016, the number of occupational fraud cases referred to law enforcement for prosecution decreased by almost 6%.
Among employee frauds, 7% of perpetrators exhibited the behavioral red flag of refusing to take vacation time. Many fraudsters are afraid to step away from their position for fear of being discovered.
The vast majority of occupational fraudsters are first-time offenders. Only 8% of perpetrators were fired for fraud-related conduct by a previous employer.
In 9% of cases, perpetrators exhibited the behavioral red flag of complaining about inadequate pay. The most common behavioral red flag was living beyond one’s means, which occurred in 46% of cases.
Financial Statement Fraud was involved in less than 10% of cases but had the highest median loss – $975,000. Financial statement fraud is more than three times as likely to be perpetrated by multiple insiders versus a single individual.
Roughly half of victim organizations ran a background check at the time the perpetrator was hired. In 11% of cases, the background check revealed at lease one red flag such as prior criminal activity, employment issues, or financial problems.
The median duration of fraud perpetrated by an employee was 12 months. The higher the level of authority within the organization, the longer a fraud typically takes to detect. The median duration of Owner/Executive fraud was twice as long.
The preceding were taken from the 2016 “Report to the Nations on Occupational Fraud and Abuse” compiled by The Association of Certified Fraud Examiners (ACFE) using information gathered from 2,410 cases of occupational fraud investigated in 114 different countries.