ACFE – Report to the Nations on Occupational Fraud and Abuse

The latest view on not-for-profit accounting issues

The Association of Certified Fraud Examiners recently released their annual “Report to the Nations on Occupational Fraud and Abuse”. The report provides statistical information on fraud in the workplace during 2014. Here are a few of their findings:

  • Participants estimated that the typical organization loses 5% of revenues each year to fraud.
  • The median loss caused by the frauds in the study was $145,000.
  • The median duration — the amount of time from when the fraud commenced until it was detected — for the fraud cases reported to ACFE was 18 months.
  • Asset misappropriations (theft) were the most common, occurring in 85% of the cases in the study, as well as the least costly, causing a median loss of $130,000.In contrast, only 9% of cases involved financial statement fraud, but those cases had the greatest financial impact, with a median loss of $1 million. Corruption schemes fell in the middle in terms of both frequency (37% of cases) and median loss ($200,000).
  • Tips are consistently and by far the most common detection method. Over 40% of all cases were detected by a tip — more than twice the rate of any other detection method. Organizations with hotlines were much more likely to catch fraud by a tip.
  • The smallest organizations tend to suffer disproportionately large losses due to occupational fraud.
  • The presence of anti-fraud controls is associated with reduced fraud losses and shorter fraud duration.
  • The higher the perpetrator’s level of authority, the greater fraud losses tend to be. Also, collusion helps employees evade independent checks and other anti-fraud controls, enabling them to steal larger amounts.
  • It takes time and effort to recover the money stolen by perpetrators, and many organizations are never able to fully do so.

To read the full report, click here.

By David Woods