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Occupational Fraud - An Analysis from ACFE

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The 2010 Report to the Nations on Occupational Fraud and Abuse is based on

the results of an online survey distributed to 22,927 Certified Fraud Examiners(CFEs) in October 2009. As part of the survey, respondents were asked to provide

a detailed narrative of the single largest fraud case they had investigated that met

four explicit criteria:

1. The case must have involved occupational fraud (defined as internal fraud, or

fraud committed by a person against the organization for which he or she works).

2. The investigation must have occurred between January 2008 and the time ofsurvey participation.

3. The investigation must have been completed.

4. The CFE must have been reasonably sure the perpetrator(s) was/were identified.

Respondents were also presented with 87 questions to answer. These questions

covered particular details of the scheme, including information about the

perpetrator, the victim organization and the methods of fraud employed, as well asfraud trends in general. Overall, we received 1,939 responses to the survey, 1

1,843 of which were usable for purposes of this Report. The data contained herein

is based solely on the information provided in these 1,843 cases.

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Highlights

The Impact of Occupational Fraud

The typical organization loses 5% of its annual revenue to fraud - translates to a potential global fraud loss

of more than $2.9 trillion. The median loss was $160,000.

Nearly one-quarter of the frauds involved losses of at least $1 million.

Small organizations are disproportionately victimized by occupational fraud.

Fraud Detection

The frauds lasted a median of 18 months before being detected.

Occupational frauds are much more likely to be detected by tip than by any other means. Anti-fraud controls appear to help reduce the cost and duration of occupational fraud schemes

Perpetrators of Fraud

High-level perpetrators cause the greatest damage to their organizations - more than three times as costly

as frauds committed by managers, and more than nine times as costly as employee frauds. Executive-level

frauds also took much longer to detect.

More than 80% of the frauds were committed by individuals in one of six departments: accounting,operations, sales, executive/upper management, customer service or purchasing.

More than 85% of fraudsters in our study had never been previously charged or convicted for a fraud-

related offense

Fraud perpetrators often display warning signs that they are engaging in illicit activity.

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The Occupational Fraud & Corruption Landscape

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Where does Fraud Hurt/Cost Most?

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Where does Fraud Hurt/Cost Most?

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How Long Do Fraud Schemes Run For?

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Where does Fraud Hurt/Cost Most?

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How are Frauds most Commonly Detected?

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How are Frauds most Commonly Detected? Territory Analysis

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How are Frauds most Commonly Detected? Territory Analysis

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Do Hotlines Work?

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Fraud & Corruption Analysis of Frequency & Median Loss by Territory

FRAUD

CORRUPTION

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11 Main Types of Occupational Fraud & Corruption Schemes

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Most Common Occupational Fraud Schemes Billing, Corruption & Non Cash

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Victims of Fraud & Corruption

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Victims of Fraud & Corruption

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Size of Organization / Fraud Scheme

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Industry Spread of Fraud & Corruption

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Industry Spread of Fraud & Corruption by Scheme

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Industry Spread of Fraud & Corruption

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Industry Spread of Fraud & Corruption

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Industry Spread of Corruption

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The Profile of Anti Fraud Controls - Frequency

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The Effectiveness of Anti Fraud Controls

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The Effectiveness of Anti Fraud Controls

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Internal Controls Weaknesses Contributing to Fraud

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Where are Controls Weakest By Size of Organization / Loss

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So...what got fixed AFTER the Fraud was identified?

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Who committed the Fraud & Corruption? Positions Held?

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Who committed the Fraud & Corruption? Gender?

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Who committed the Fraud & Corruption? Gender / Position / Loss?

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Who committed the Fraud & Corruption? Age Group?

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Who committed the Fraud & Corruption? Tenure / Loss?

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Who committed the Fraud & Corruption? Education?

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Which Departments were the Perpetrators in?

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Which Departments were the Perpetrators in? Territory Analysis

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Fraud & Corruption Schemes by Senior Executives

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Was the Fraud & Corruption not Obvious? Red Flags?

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Was the Fraud & Corruption not Obvious? Red Flags?

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Was the Fraud & Corruption not Obvious? Red Flags?

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Was the Fraud & Corruption not Obvious? Red Flags?

h d & i b i ? d l ?

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Was the Fraud & Corruption not Obvious? Red Flags?