INTRODUCTION
This paper is written to summarize my learnings from the Report to the Nations on Occupational Fraud and Abuse (“Report to the Nations”) published by the Association of Certified Fraud Examiners (“ACFE”). Most sections of the Report to the Nations will be written about individually. The sections of the Report to the Nation that will be discussed are as follows:
1. The Cost of Occupational Fraud;
2. How Occupational Fraud is Committed;
3. Detection of Fraud Schemes;
4. Victim Organizations;
5. Perpetrators; and
6. Case Results
THE COST OF OCCUPATIONAL FRAUD
Frauds are estimated to cause about 5% of lost revenue to a company annually. This number is based on estimates by Certified Fraud Examiners (“CFEs”) and is in no way a definite or proved number. Of the 2,410 cases included in the Report to the …show more content…
The Fraud Tree shows three types of fraud: corruption, asset misappropriation, and financial statement fraud. Each category is then further broken down. The frequency of the category of fraud and the median dollar amount of loss are inversely related. Asset misappropriation accounted for 83.5% of frauds with a median loss of $125,000. Corruption accounted for 35.4% of frauds with a median loss of $200,000. Financial statement fraud accounted for 9.6% of frauds with a median loss of $975,000. Of all cases, 31.8% had more than one fraud category, with the most common pairing being asset misappropriation and corruption. In the category of asset misappropriation, check tampering was the most costly (median loss of $158,000) and billing schemes being the most common (22.2% of cases). Fraud schemes have a tendency to increase in median loss as time goes on. Schemes caught in 6 months or less had a median loss of $45,000, while schemes that went on for greater than 60 months had a median loss of $850,000. The median duration for a scheme being being caught was 18
This paper is written to summarize my learnings from the Report to the Nations on Occupational Fraud and Abuse (“Report to the Nations”) published by the Association of Certified Fraud Examiners (“ACFE”). Most sections of the Report to the Nations will be written about individually. The sections of the Report to the Nation that will be discussed are as follows:
1. The Cost of Occupational Fraud;
2. How Occupational Fraud is Committed;
3. Detection of Fraud Schemes;
4. Victim Organizations;
5. Perpetrators; and
6. Case Results
THE COST OF OCCUPATIONAL FRAUD
Frauds are estimated to cause about 5% of lost revenue to a company annually. This number is based on estimates by Certified Fraud Examiners (“CFEs”) and is in no way a definite or proved number. Of the 2,410 cases included in the Report to the …show more content…
The Fraud Tree shows three types of fraud: corruption, asset misappropriation, and financial statement fraud. Each category is then further broken down. The frequency of the category of fraud and the median dollar amount of loss are inversely related. Asset misappropriation accounted for 83.5% of frauds with a median loss of $125,000. Corruption accounted for 35.4% of frauds with a median loss of $200,000. Financial statement fraud accounted for 9.6% of frauds with a median loss of $975,000. Of all cases, 31.8% had more than one fraud category, with the most common pairing being asset misappropriation and corruption. In the category of asset misappropriation, check tampering was the most costly (median loss of $158,000) and billing schemes being the most common (22.2% of cases). Fraud schemes have a tendency to increase in median loss as time goes on. Schemes caught in 6 months or less had a median loss of $45,000, while schemes that went on for greater than 60 months had a median loss of $850,000. The median duration for a scheme being being caught was 18