The Association of Certified Fraud Examiners (ACFE) recently released the Report to the Nations: 2020 Global Study on Occupational Fraud and Abuse. This is the 11th Report to the Nations since 1996, and over its history it has become the primary source of fraud data and research. The 2020 report covers 2,504 cases from 125 countries; cases which resulted in losses of $3.6 billion from fraud. The data contained in the report is generated by Certified Fraud Examiners (CFEs) around the world who submit information on cases they have investigated over approximately the last two years.
Some interesting findings from the report include:
Consistent with the findings in prior years, it is estimated that organizations lose 5% of revenue to fraud each year.
Median losses per case were $125,000, while the average loss per case was $1,509,000.
Fraud schemes were detected by tip 43% of the time, and half of those tips came from employees.
A lack of internal controls contributed to nearly 1/3 of the frauds reported.
While the report is full of excellent information, it is important that organizations are able to use that information to guide their anti-fraud controls and responses, as effective anti-fraud controls are associated with lower fraud losses and quicker detection of fraud. Based on information in the report, small businesses are more likely to experience billing fraud, payroll fraud, and check and payment tampering fraud than large organizations. The report notes, the typical fraud lasts 14 months before detection and causes $8,300 per month in losses, and there is correlation between the length of the fraud and the median loss.
Unfortunately, because of our experience, we are never surprised at the findings from the ACFE report. We will provide further in-depth analysis related to the various industries and schemes represented in the report in subsequent Our Thoughts On articles. Our team of will incorporate the updated information presented in the report to assist our clients to assess controls and respond to fraud that has occurred within their organization. If you have questions or concerns about detecting or deterring fraud please contact Tom Pratt at [email protected] or Brian Webster [email protected].
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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.