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Key Findings in Annual Fraud Report Identify Vulnerabilities for Companies

May 10, 2018 | BerganKDV Team

Fraud is something that poses a tremendous threat to organizations of all sizes and types. Every two years, the Association of Certified Fraud Examiners (ACFE) compiles a Report to the Nations, where they outline key findings and statistics about how fraud is committed and the characteristics of the people who commit fraud. Below is a recap of the 2018 key findings that were recently released by the ACFE.

Key Findings

  • $130,000 was the median loss per case. Owners or executives who committed fraud caused a median loss of $850,000.
  • Fraudsters who had been with their company longer stole twice as much.
  • 85% of fraudsters displayed at least one behavioral red flag for fraud.
  • Small businesses lost almost twice as much per scheme to fraud with a median loss of $104,000.
  • Asset misappropriation schemes are the most common (89% of cases) and least costly (median loss of $114,000).
  • Financial statement fraud schemes are the least common (10% of cases) and the most costly ($800,000 median loss).
  • The most common concealment method used by fraudsters is the creation of fraudulent or altered physical documents.
  • Data monitoring/analysis and surprise audits were correlated with the largest reductions in fraud loss and duration.
  • Tips are by far the most common initial detection method. Employees provide over half of tips and nearly one-third come from outside parties.

What steps do I need to take to be more proactive in detecting fraud?

Lack of internal controls or an employee’s ability to override existing controls are the primary internal control weaknesses that contribute to occupational fraud. There are also behavioral red flags that can help organizations detect fraud perpetrators, with six that are the most common. They are:

  • Living beyond means.
  • Financial difficulties.
  • Unusually close association with vendor/customer.
  • Control issues, unwilling to share duties.
  • Divorce/family problems.
  • “Wheeler-dealer” attitude.

BerganKDV has a Fraud & Forensic team who can help you look at your risk. We will help you build monitoring tools that can be used to identify transactions with potential for greatest risk of impropriety. We will share our thoughts on your higher risk transactions and help you properly develop and assess your risk management system.

If you would like to learn more about how you can best protect your organization, please email Certified Fraud Examiners Steve Wischmann, steve.wischmann@bergankdv.com; Michael Bosl, michael.bosl@bergankdv.com or Kristi Goodale, kristi.goodale@bergankdv.com.

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