WORKPLACE FRAUD- SOME FACTS AND FIGURES
A recent report published by the Association of Certified
Fraud Examiners examined Occupational Fraud and Abuse. This global study revealed some interesting
statistics, which as an investigator you may find of value.
The typical business loses 5% of its revenues to fraud each
year! When you deal with businesses and
they discuss a level of acceptable shrinkage, a figure in the area of 5% of
revenue can be boggling.
The most common type of fraud involves asset misappropriation
schemes, which composed 87% of the cases that they received.
The most likely manner that occupational fraud is detected
is through an internal tip. Hotlines
established for this purpose are crucial to the business.
Most occupational fraudsters are first-time offenders with
clean employment histories. Almost 87%
of fraudsters were found to have never been charged or convicted of a fraud
related offense.
In 81% of cases there was behavioral red flags displayed
that indicated fraudulent actions. Among
the most commonly observed were living beyond means (36%) financial
difficulties (27%), unusually close association with vendors or customers
(19%).
When addressing workplace fraud investigations, keep in mind
some of the conclusions and recommendations of this study.
Providing individuals a means of reporting suspicious
activity is a critical part of an anti-fraud program. Mechanisms to report fraud such as hotlines, email
or mail boxes, should be in place and their use encouraged by management. The existence of an anti-retaliation policy
should be also be in place and made known to workers.
Businesses cannot rely on outside audits to uncover
fraud. External audits serve an
important purpose and can have a strong preventive effect on potential fraud,
their usefulness as a means of uncovering fraud is limited. Look to internal procedures in place to
uncover elements of fraud.
The cost of fraud to a business is damaging. Half of the organizations experiencing
workplace fraud never recover any of their losses. A fraud prevention program that continually
assesses the organization’s fraud risks needs to be put in place.
