How does your business compare to the latest fraud survey statistics published by the ACFE?
Every two years the Association of Certified Fraud Examiners (ACFE) publishes a fraud survey. An international survey of Certified Fraud Examiners was conducted during 2021, the results of which have just been published in the ‘Occupational Fraud 2022: A Report to the Nations.’
The survey was in relation to occupational fraud. Occupational fraud is one that is committed by a person against an organisation for which they work. The report is made up of data across 2,110 real occupational fraud cases across 133 countries. Men are perpetrating an increasing percentage of frauds (73%) versus 27% for women. However, women are narrowing the gap in terms of median loss with men accounting for USD125k and women for USD100k.
The survey provides a compelling case for organisations to implement and maintain a hotline and/or other mechanisms to report alleged misconduct with 42% of frauds being detected by tips, three times as many reports as the next most common method. More than half of all tips came from employees, with web-based reporting and emails surpassing telephone hotlines as the most common methods of reporting alleged misconduct. Those organisations with hotlines detected fraud more quickly and had lower losses than organisations without a hotline.
Nearly 50% of all reported frauds occurred in four broad areas of business including Operations, Accounting, Executive/Upper management and Sales. The report identifies a decrease in organisations pursuing criminal prosecution (58% down from 65% in 2012) and an increased number are taking civil action (29% up from 23% in 2012).
There are some interesting statistics to draw upon. A very brief summary appears below.
TENURE OF FRAUDSTER
• Collusion/collaboration between two or more perpetrators to perpetrate a fraud has increased from 42% in 2012 to 58% in the 2022 report;
• Long-tenured fraudsters take longer to catch. Fraudsters with 10 years and more service take about 24 months to catch; and
• Long-tenured fraudsters steal almost three times more than those fraudsters with 5 years or less service.
• Frauds are being identified faster than 10 years ago:
o In 2012 the median loss of a fraud was USD140k and the median duration to identify the fraud was 18 months; and
o In 2022 a typical fraud has a median duration for detection of 12 months and a median loss of USD117k.
The top 5 increases in anti-fraud controls has included fraud training for staff, anti-fraud policies, fraud training for managers/executives, fraud risk assessments. The most significant increase in anti-fraud controls over the last 10 years has been the implementation of a whistleblowing hotline (up 16%).
• Organizations with hotlines detect fraud more quickly reducing the identification delay from 18 months to 12 months;
• Fraud losses were two times higher at organizations without hotlines (USD200k);
• The presence of anti-fraud controls is associated with lower fraud loses and faster fraud detection with nearly half of frauds occurring due to a lack of internal controls (29%) or overriding existing controls (20%); and
• Reports of fraud are more likely to be submitted through hotlines where staff have had training (58%) as opposed to 42%, without training.
CONCEALMENT OF FRAUDS
In terms of concealing frauds, the top three methods adopted by fraudsters were where 39% created fraudulent physical documents, 32% altered physical documents and 28% created fraudulent electronic documents or files.
In conclusion, is some respects we are improving the ability to detect fraud earlier but further work still needs to be done to help organizations better protect themselves from occupational fraud. If you would like to speak with us about how we can assist your organisation, then please contact us directly. To obtain a copy of the ACFE Report to the Nations 2022, please click on the link here.
CurbyMcLintock is a boutique forensic services firm that helps organisations better manage fraud and compliance risk and respond in a timely manner if things go wrong. As part of our services, we utilise advanced data analytics to draw insights from disparate data sets to allow decision makers to make informed decisions. We also utilise data analytics to help drive better compliance outcomes by identifying vulnerabilities and reporting on key compliance risks in real time. We help selected organisations to automate and optimize routine compliance functions using specialist proprietary software with inbuilt AI, alleviating already pressed compliance staff to concentrate on more serious matters.
Linkedin – How does your business compare to the latest fraud survey statistics published by the Association of Certified Fraud Examiners
WHO IS CURBYMCLINTOCK?
‘Because fraud happens’, you can’t afford to ignore it. A fraud can have a significant impact on an organisation beyond losses suffered directly from the fraud. There are also the costs associated with investigating, litigating, regulatory ramifications, public relations, staff management and the time required managing the fallout from a fraud.
A proactive approach is a sensible and cost-effective method to prevent fraud occurring in the first instance. We typically find that organisations rely on standard controls supported by policy and procedures as the only line of defence against fraud. This is simply not enough, and your stakeholders and regulators expect you to take a more robust, proactive approach to protecting your organisation from financial loss and other associated risks.
CurbyMcLintock can assist you become fraud resilient by adopting a methodology which combines skilled interviewing techniques and tapping into the knowledge of your staff who are at the coalface of business operations, to help uncover where your organisation is exposed to internal and external fraud. We will then provide you with mitigation strategies to reduce the risk of a fraud incident occurring