Brief Insights | Meeting Provider Relief Fund Reporting Requireme...
VIEWpoint Issue 2 | 2021
2021-2022 Tax Planning Guide
The Association of Certified Fraud Examiners (ACFE) has released its annual global study on occupational fraud: Report to the Nations 2020. In this report, the ACFE studied 2,504 cases between January 2018 and September 2019 from 125 countries, resulting in over $3.6 billion in lost revenue. With International Fraud Awareness Week upon us (Nov. 14-20, 2021), here are key takeaways from the report, as well as resources to help you prevent fraud from infiltrating your organization.
The most common scheme (86% of cases) was asset misappropriation, in which an employee steals or misuses the organization’s resources (such as theft of company cash, false billing schemes or inflated expense reports). The average fraud case lasted 14 months before detection and the estimated amount of revenue lost per year was 5%.
Of the 2,504 cases studied by the ACFE, here are the most common characteristics of an occupational fraudster:
The most popular industries for fraud schemes are banking and financial services, government and public administration, manufacturing, healthcare and energy. Since small business and nonprofit organizations have fewer anti-fraud controls, they are more susceptible to fraud than large businesses. Within small businesses, the odds of billing fraud and payroll fraud were two times higher, and check and payment tampering was four times higher.
43% of schemes were detected by tips, with half of those tips coming from employees. 80% of fraudsters who were caught faced internal discipline from their victim organization, with 46% of these organizations failing to report cases to law enforcement because they considered internal discipline to be sufficient.
Fraud is a long withstanding threat to businesses. So long as individuals have access to an organization’s assets, there will always be a risk of fraudulent behavior. As a result, organizations must take steps to safeguard themselves to prevent costly losses. Building strong internal controls, or procedures to avoid fraud and detect it, reduces the opportunity for fraudsters to succeed. Moreover, testing these controls frequently safeguards your business in between annual audits.
Most importantly, if you’re concerned fraud is occurring within your organization, it’s imperative to ask for assistance. The certified fraud examiners in Doeren Mayhew’s Valuation and Litigation Support Group are here to help you understand your overall fraud risk and strengthen your internal controls – contact us today.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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