The Association of Certified Fraud Examiners is the world’s largest anti-fraud organization. Its mission is to reduce the incidence of fraud and white-collar crime and to assist its membership in fraud detection and deterrence. Its most recent “Report to the Nations on Occupational Fraud and Abuse” (2010) truly reflects fraud as a global epidemic, estimating that the typical organization loses 5% of its annual revenue to fraud, most of which is attributable to white-collar crime. Translated on a global scale, this figure approximates $2.9 trillion. Small organizations are hit the hardest due to the fact that they are typically lacking in anti-fraud controls.
What is “white-collar” crime and who are its perpetrators? White-collar crime encompasses a range of fraud types including financial statement omission; theft of assets, intellectual property, and customer records; bribery, and many others. According to the report, high-level executives are most likely to be at the center of large financial frauds, with owners and executive frauds more than three times as costly as frauds committed by managers, and more than nine times as costly as employee frauds. And what departments breed the greatest number of fraudsters? – Accounting tops the list, followed by operations, sales, customer service and purchasing.
Sadly enough fraud tends to have warning signs generally referred to as “red flags” that in many cases are ignored over an extended period of time. Red flags include employees living lifestyles well beyond their means, those who consistently elect to forgo vacation, recordkeeping practices that on the surface appear to be substandard, and numerous others.
Are your organization’s employees’ trained in fraud prevention and detection practices? Now is your opportunity to expand your fraud mitigation skills. Schneider Downs is hosting a free Combating Fraud Seminar on January 18 in Columbus, Ohio. This is a valuable opportunity to hear FBI agents discuss public corruption investigations and attend fraud based educational sessions.
Education is the foundation for preventing and detecting occupational fraud. Now’s your chance to take what you learn and apply it to your own organization.
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