I have been a proud member of The Association of Certified Fraud Examiners (ACFE) for more than 25-years. The organization is known and respected around the world, and its namesake credential The CFE is the gold standard for internal auditors, fraud investigators and others who want to demonstrate their proficiency in fraud detection and prevention.
ACFE also publishes its renowned “Occupational Fraud: Report to the Nations.” The 2022 edition was just published, and it is chock full of valuable information and insights for internal auditors and others. This year’s report is the 12th edition, and as ACFE CEO Bruce Dorris noted in the foreword, this year’s report “is unique in that it explores frauds that were investigated largely during a global pandemic – a time when anti-fraud professionals, like so many others, were challenged to find new, innovative ways to conduct much of their work.”
Despite the challenges imposed by the pandemic, ACFE found that “occupational frauds were detected more quickly, and losses were limited compared to prior years.” This year’s report was based on over 2,000 cases of occupational fraud committed in more than 130 countries in 23 industries between January 2020 and September 2021. The report offers an extensive analysis of the frauds committed, and there is far too much information to cover in a single blog. But several statistics were particularly notable to me included:
The 2000+ fraud cases examined resulted in more than $3.6 billion in losses – an average of almost $1.8 million per case.
Survey respondents estimated that their organizations lose almost 5% of revenue to fraud every year.
The five global regions reporting the highest losses from fraud are:
- Eastern Europe and Western Central Asia
- Latin America and the Caribbean
- Middle East and Northern Africa
- United States and Canada
The three most common forms of occupational fraud are:
- Asset misappropriation
- Financial statement fraud
How occupational fraud is detected:
- Tips (42%)
- Internal audit (16%)
- Management review (12%)
- Document examination (6%)
- By accident (5%)
- External audit (4%)
It should not be a surprise that internal auditors are 4 times more likely to detect a fraud than the external auditors. This has long been recognized by the ACFE. However, the largest fraud schemes are financial statement frauds which are more likely to be detected by external auditors. Thus, internal, and external auditors are a compelling duo when it comes to detection of occupational fraud in modern organizations.
As I noted, the report is an exceptional resource for internal auditors when it comes to fraud risk assessment and the critical role the profession plays in the prevention and detection of fraud. Other topics covered in the report include:
- An analysis of “victim organizations”
- The most likely perpetrators of fraud (and their profiles)
- Which asset misappropriation scheme presents the greatest risk
- The length and velocity of occupational fraud schemes
- How perpetrators conceal their frauds
- The effectiveness of hotline and reporting mechanisms
- COVID’s effect on occupational fraud
As always, ACFE’s “Report to the Nations” is a compelling read that is hard to put down once you pick it up. This year’s report is an easy read packed with easy-to-digest infographics.
Do yourself a favor and download the free report today. Share the report’s key highlights with your stakeholders – it’s an excellent source of insight. You will be glad you did.
I welcome your comments via LinkedIn or Twitter (@rfchambers).