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Fraud Statistics

Gettry Marcus’ Certified Fraud Examiners present the second in a multi-part series devoted to Fraud Prevention and Detection.

The Association of Certified Fraud Examiners (ACFE), a leading organization in the area of fraud prevention and detection, publishes biennially a comprehensive study of fraud in the workplace. The Report to the Nations on Occupational Fraud and Abuse – 2014 Global Fraud Study is based on 1,483 cases of occupational fraud, as reported by the Certified Fraud Examiners who investigated them. The ACFE defines occupational fraud as –

“The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or asset”

Some of the more interesting statistics presented in the Report to the Nations on Occupational Fraud and Abuse – 2014 Global Fraud Study are as follows:

General Statistics:

  • The typical organization loses an estimated 5% of its annual revenues to occupational fraud. Worldwide, this represents an annual loss to fraud of approximately $3.7 trillion;
  • The majority of cases (51.9%) reported losses of less than $200,000;
  • Financial statement fraud is the most costly form of occupational fraud, causing a median loss of $1,000,000;
  • Fraud is most commonly detected by tip (42.2%), management review (16.0%), and internal audits (14.1%). Interestingly, external audits (performed by CPA firms) only account for approximately 3.0% of fraud detection;
  • The majority of the instances where fraud is discovered by tips comes directly from employees (49.0%), followed by customers (21.6%).

Victim Organization Statistics:

  • Internal control weaknesses observed by Certified Fraud Examiners include:
    • Lack of internal controls (32.2%)
    • Override of existing internal controls (18.9%)
    • Lack of management review (20.0%)

Perpetrator Statistics:

  • The position of the perpetrator of the fraud was most commonly the employee (42.0%), manager (36.2%), and the owner/executive (18.6%);
  • Employees, although the most frequent perpetrator, committed the least median loss in dollar amount ($64,000) when compared to the managers and owners/executives;
  • 66.8% of the reported perpetrators were male.

The The Report to the Nations on Occupational Fraud and Abuse – 2014 Global Fraud Study is a must read for any business person wishing to understand occupational fraud and its effect on individual business and the world economy.

The complete study can be found at http://www.acfe.com/rttn/docs/2014-report-to-nations.pdf

Gettry Marcus’ Business Valuation & Litigation Services Group offers sophisticated business valuation, forensic accounting and litigation support services. We have broad experience identifying relevant evidence and analyzing financial information in a variety of complex circumstances. Our analytical strengths bring clarity to complex financial transactions, focusing only on the applicable issues.

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