ACFE: U.S. Organizations Impacted By Fraud

U.S. organizations lose an estimated seven percent of their annual revenues to fraud, according to a survey of Certified Fraud Examiners who investigated cases between January 2006 and February 2008. The Association of Certified Fraud Examiners (ACFE) published the results of the survey in its 2008 Report to the Nation on Occupational Fraud & Abuse.

The benchmarking data is compiled from 959 cases of occupational fraud that were investigated between January 2006 and February 2008. When applied to the projected 2008 United States Gross National Product, the seven percent figure translates to approximately $994 billion in fraud losses.

The Report also found that:

• Fraud schemes tend to be extremely costly. The median loss caused by the occupational frauds in this study was $175,000. More than one-quarter of frauds involved losses of at least $1 million.
• Schemes frequently continue for years before they are detected. The typical fraud in our study lasted two years from the time it began until the time it was caught by the victim organization.
• Frauds were most often committed by the accounting department or upper management, and most fraudsters were first-time offenders. Only seven percent of fraud perpetrators in the study had prior convictions and only 12 percent had been previously terminated by an employer for fraud-related conduct.
• Occupational frauds are much more likely to be detected by a tip than by audits, controls or other means.
• Small businesses are especially vulnerable to occupational fraud.
• Seventy-eight percent of victim organizations modified their anti-fraud controls after discovering that they had been defrauded.

The Report also details findings such as how organizations were impacted based upon industry, how the implementation of anti-fraud controls affected exposure to fraud, and the most common behavioral traits observed among fraud perpetrators.

The Report to the Nation is available for download online at the ACFE’s Web site: www.ACFE.com/RTTN. The Report is in PDF format.

The first Report to the Nation was published by the ACFE in 1996. The ACFE has published subsequent editions in 2002, 2004, 2006, and now 2008.

The 2008 Report was officially released to the public on Monday at the 19^th Annual ACFE Fraud Conference & Exhibition in Boston. More than 2,000 anti-fraud professionals from all over the world have gathered for training and to share the latest techniques, best practices and resources for fighting fraud. To read more about the Fraud Conference, visit www.FraudConference.com.