The Association of Certified Fraud Examiners (ACFE) recently released its 2016 Report to the Nations on Occupational Fraud and Abuse. Once again, the number one method for detecting fraud was through tips.
Of the frauds that were discovered, 39.1% were discovered by tips. That number differs between companies based on the size of the organization. For organizations with more than 100 employees, 43.5% of fraud was detected by tips versus only 29.6% for smaller organizations. This may be in large part due to the fact that many small organizations do not have a fraud tip line, whereas larger organizations have more resources available to report suspected fraud or abuse.
Over the past several years there has been an increase in the number of third-party tip line options available to organizations of all sizes. These options include the ability to submit tips through telephone, email or web-based forms with annual fees that will vary depending on the size of the organization. Some smaller organizations may feel that the cost of a tip line is too expensive; however, if you consider the cost of fraud, then it may be well worth the price. A copy of the ACFE report can be obtained from their website at www.acfe.com.
Jeff Patterson, CPA, MBA