Preventing fraud requires the use of timely data and related controls so that organizations can implement protocols that currently reflect the methods of criminals to better protect themselves against fraudulent attacks. That’s why the Association of Certified Fraud Examiners (ACFE) created the Report to the Nations, which is a global study of occupational fraud and abuse. The group recently released its 2022 report which captured data on 2,110 real fraud cases from 133 countries worldwide and explores the true cost, tactics, victims, and perpetrators of fraud schemes.
Here’s a look at some of the key discoveries made in this year’s report that highlight the impact fraud can have on an organization:
- CFEs estimate that organizations lose about 5% of revenue annually to fraud. The median loss per fraud case according to the report is $117,000 and the average loss per fraud cause is around $1,783,000.
- Tips remain the most common fraud detection method at 42%. This is almost 3x more frequent than the next most common detection method. In the report’s findings, more than half of all reported tips came from employees.
- For schemes, the report noted that asset misappropriation schemes were the most common at 86% of cases, but the least costly with a median loss of $100,000.
- The report lists the top 5 industries for the median amount lost to fraud, here’s a breakdown of the industries that made the list:
- Real Estate with a median loss of $435,000
- Wholesale Trade with a median loss of $400,000
- Transportation with a median loss of $250,000
- Construction with a median loss of $203,000
- Utilities with a median loss of $200,000
- Organizations with the smallest amount of employees had the highest median loss at about $150,000.
- 85% of fraudsters caught in the report demonstrated behavioral red flags of committing fraudulent activity and only 6% had a prior conviction.
- Almost half of the fraud cases in the report occurred because of a lack of internal controls or an override of existing controls.
- 81% of organizations that experienced a fraudulent attack adjusted their anti-fraud controls following the fraud. 75% increased their management review processes and 64% increased their data monitoring and analysis.
There were many additional findings in the report that are incredibly insightful. To view the full Report to the Nations, click here.
After reviewing some of the highlights from the report, the most important thing to note is how crucial it is to have controls in place at your organization to prevent attacks. By implementing robust procedures and routinely training your employees on what red flags of fraud to watch for, you can help keep your organization’s money out of the hands of fraudsters.
At BerganKDV, our Forensic and Data Services team recently launched PlainSight, a completely anonymous fraud hotline tool designed to empower employees to speak up when they witness workplace fraud. The tool includes a traditional phone line and an intuitive web-based form so that employees can opt for whichever reporting method they are most comfortable with. Once a tip is submitted, our fraud experts at BerganKDV will evaluate to determine if a formal investigation is needed and will assist you with the next steps.
Want to learn more about PlainSight? Let’s have a conversation!