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.