Statistics

​​According to the Association of Certified Fraud Examiners 2014-2015 Fraud Survey:

  • Survey participants estimated that the typical organization loses 5% of revenues each year to fraud.
  • The median loss caused by the frauds in the study was $150,000. Additionally, 23.2% of the cases involved losses of at least $1 million.
  • The median duration — the amount of time from when the fraud commenced until it was detected — for the fraud cases reported was 18 months. Schemes that lasted more than 5 years caused a median loss of $850,000.
  • Occupational frauds can be classified into three primary categories: asset misappropriations, corruption and financial statement fraud. Of these, asset misappropriations are the most common, occurring in 83% of the cases in the study, causing a median loss of $125,000. In contrast, less than 10% of cases involved financial statement fraud, but those cases had the greatest financial impact, with a median loss of $975,000. Corruption schemes fell in the middle in terms of both frequency (35.4% of cases) and median loss ($200,000).
  • Among the various forms of asset misappropriation, billing schemes and check tampering schemes posed the greatest risk based on their relative frequency and median loss. 
  • The smallest organizations tend to suffer disproportionately large losses due to occupational fraud. The median loss suffered by small organizations (those with fewer than 100 employees) was the same as those incurred by the largest organizations (those with more than 10,000 employees).  Therefore, frauds committed within small organizations typically have a devastating effect.
  • The specific fraud risks faced by small organizations differ from those faced by larger organizations, with certain categories of fraud being much more prominent at small entities than at their larger counterparts. Check tampering, skimming, payroll, and cash larceny schemes were twice as common in smaller organizations as in larger organizations.
  • ​Approximately 75% of the frauds in the study were committed by individuals working in one of seven departments: accounting, operations, sales, executive/upper management, customer service, purchasing and finance. More occupational frauds originated in the accounting department (16.6%) than in any other business unit.
  • ​The presence of anti-fraud controls resulted in both lower fraud losses and quicker detection. Fraud schemes that occurred at victim organizations that had implemented any of several common anti-fraud controls were significantly less costly and were detected much more quickly than frauds at organizations lacking these controls. Fraud losses were 14%- 54% lower and frauds were detected 33%-50% more quickly at organizations that had specific anti-fraud controls in place versus organizations lacking those controls.
  • ​In 94.5% of the cases in our study, the perpetrator took some efforts to conceal the fraud. The most common concealment methods were creating and altering physical documents.
  • ​When fraud was uncovered through active detection methods, such as surveillance and monitoring or account reconciliation, the median loss and median duration of the schemes were lower than when the schemes were detected through passive methods, such as notification by police or by accidental discovery.
  • ​Small organizations had a significantly lower implementation rate of anti-fraud controls than large organizations. This gap in fraud prevention and detection coverage leaves small organizations extremely susceptible to frauds that can cause significant damage to their limited resources.
  • ​The most prominent organizational weakness that contributed to the frauds in our study was a lack of internal controls, which was cited in 29.3% of cases, followed by an override of existing internal controls, which contributed to just over 20% of cases.  Collectively, missing internal controls and ineffective internal controls contributed to 50% of the frauds.
  • ​The more individuals involved in an occupational fraud scheme, the higher losses tended to be. The median loss caused by a single perpetrator was $85,000. When two people conspired, the median loss was $150,000.
  • ​Fraud perpetrators tended to display behavioral warning signs when they were engaged in their crimes. The most common red flags were living beyond means, financial difficulties, unusually close association with a vendor or customer, excessive control issues, a general “wheeler-dealer” attitude involving unscrupulous behavior, and recent divorce or family problems. At least one of these red flags was exhibited during the fraud in 78.9% of cases.
  • Most occupational fraudsters are first-time offenders. Only 5.2% of perpetrators in this study had previously been convicted of a fraud-related offense, and only 8.3% had previously been fired by an employer for fraud-related conduct.
  • ​In 40.7% of cases, the victim organizations decided not to refer their fraud cases to law enforcement, with fear of bad publicity being the most-cited reason.
  • ​​External audits are implemented by a large number of organizations, but they have proven to be one of the least effective controls in combating occupational fraud. Such audits were the primary detection method of fraud in fewer cases than fraud that is detected by accident. Further, although the use of independent financial statement audits was associated with reduced median losses and durations of fraud schemes, these reductions were among the smallest of all of the anti-fraud controls analyzed in the study. Consequently, while independent audits serve a vital role in organizational governance, the data indicates that they should not be relied upon as organizations’ primary anti-fraud mechanism.