Based on the previous years reported fraud events, the ACFE estimates that a typical business loses 5% of its revenue to fraud each year. Only 15% of these fraud schemes were discovered by internal audit, 4% by external audit, 3% by surveillance and 2% by internal controls.
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Perpetrators with higher levels of authority tend to cause much larger losses. The median loss among frauds committed by owner/executive was $600,000, the median loss caused by managers was $150,000 and the median loss caused by employees was $60,000.
The vast majority (76%) of all frauds in our study were committed by individuals working in one of the eight departments: accounting, operations, sales, executive/upper management, customer services, administrative support, purchasing and finance. This distribution was very similar to what we found in our 2016 study.
Most occupational fraudsters are first-time offenders with clean employment histories. Approximately 89% of occupational fraudsters had never been charged or convicted of a fraud-related offense, and 86% had never been punished or terminated by an employer for fraud-related conduct.
Approximately half of the cases in this study involved multiple perpetrators who colluded with one another to commit fraud. Fraud losses rose significantly when more than one fraudster was involved in a scheme. With three or more perpetrators the median loss was $350,000.00.