Figure 1: Occupational Frauds by Category Frequency

Transcription

1 Figure 1: Occupational Frauds by Category Frequency TYPE OF FRAUD Asset Misappropriation Corruption Financial Statement Fraud 12.8% 26.7% 89.5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2 Figure 2: Occupational Frauds by Category Median Loss TYPE OF FRAUD Asset Misappropriation Corruption Financial Statement Fraud $173,000 $250,000 $500,000 $0 $200,000 $400,000 $600,000 MEDIAN LOSS

3 Figure 3: Frequency of Fraud Schemes Billing 29.1% Corruption 26.7% Expense Reimbursements Non-Cash 16.3% 17.4% SCHEME TYPE Financial Statement Fraud Cash on Hand Check Tampering Skimming Cash Larceny Payroll 12.8% 11.6% 11.6% 11.6% 10.5% 10.5% Register Disbursements 5.8% 0% 5% 10% 15% 20% 25% 30% 35%

4 Figure 4: Initial Detection of Occupational Frauds Tip 32.6% Management Review 20.9% Internal Audit 16.3% DETECTION METHOD Other By Accident Account Reconciliation Document Examination External Audit 3.5% 3.5% 2.3% 7.0% 9.3% Notified by Law Enforcement 2.3% IT Controls 1.2% Confession 1.2% 0% 5% 10% 15% 20% 25% 30% 35%

5 Figure 5: Impact of Hotlines on the Top Six Detection Methods Tip 13.2% 50.0% DETECTION METHOD Internal Audit Management Review By Accident Other 14.3% 14.3% 7.1% 5.3% 7.1% 10.5% 21.1% 31.6% Organizations With Hotlines Document Examination 4.8% 2.6% Organizations Without Hotlines 0% 10% 20% 30% 40% 50% 60%

6 Figure 6: Type of Victim Organization Frequency and Median Loss $350, % 40% $300,000 $300,000 35% MEDIAN LOSS $250,000 $200,000 $150,000 $100,000 $50, % $148, % $125, % 5.8% 30% 25% 20% 15% 10% 5% $0 Private Company Government Public Company Not-for-Profit* Other* 0% TYPE OF VICTIM ORGANIZATION Median Loss Percent of Cases *Not-for-Profit and Other categories had insufficient responses for median loss calculation.

7 Figure 7: Size of Victim Organization Frequency and Median Loss $350,000 35% MEDIAN LOSS $300,000 $250,000 $200,000 $150,000 $100,000 $300, % $180, % $86, % 25.3% $110,000 30% 25% 20% 15% 10% $50,000 5% $0 < ,000 9,999 10,000+ 0% NUMBER OF EMPLOYEES Median Loss Percent of Cases

8 Figure 8: Industry of Victim Organization INDUSTRY Banking and Financial Services Government and Public Administration Health Care Construction Retail Manufacturing Insurance Transportation and Warehousing Education Oil and Gas Mining Wholesale Trade Telecommunications Technology Services (Other) Real Estate Other Arts, Entertainment, and Recreation Agriculture, Forestry, Fishing, and Hunting Utilities 1.2% 15.1% 14.0% 9.3% 7.0% 5.8% 5.8% 5.8% 4.7% 4.7% 3.5% 3.5% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% Services (Professional) 1.2% 0% 2% 4% 6% 8% 10% 12% 14% 16%

9 Figure 9: Frequency of Anti-Fraud Controls ANTI-FRAUD CONTROL External Audit of F/S 83.3% Management Certification of F/S 79.7% Code of Conduct 79.2% Employee Support Programs 77.0% External Audit of ICOFR 65.8% Internal Audit Department 64.7% Management Review 61.5% Independent Audit Committee 59.2% Hotline 52.5% Anti-Fraud Policy 39.0% Dedicated Fraud Department, Function, or Team 38.6% Fraud Training for Employees 38.0% Proactive Data Monitoring/Analysis 37.2% Formal Fraud Risk Assessments 35.5% Fraud Training for Managers/Executives 35.4% Surprise Audits 31.1% Job Rotation/Mandatory Vacation 16.2% Rewards for Whistleblowers 8.0% 0% 20% 40% 60% 80% 100% Key: External Audit of F/S = Independent External Audits of the Organization s Financial Statements Management Certification of F/S = Management Certification of the Organization s Financial Statements External Audit of ICOFR = Independent External Audits of the Organization s Internal Controls Over Financial Reporting

10 Figure 10: Median Loss Based on Presence of Anti-Fraud Controls* Control Percent of Cases Control in Place Control Not in Place Percent Reduction Job Rotation/Mandatory Vacation 16.2% $16,000 $250, % External Audit of Financial Statements 83.3% $135,000 $750, % Internal Audit Department 64.7% $112,000 $396, % Surprise Audits 31.1% $80,000 $250, % Formal Fraud Risk Assessments 35.5% $80,000 $250, % Employee Support Programs 77.0% $125,000 $350, % Anti-Fraud Policy 39.0% $98,000 $250, % Hotline 52.5% $111,000 $250, % External Audit of Internal Controls over Financial Reporting 65.8% $111,000 $250, % Dedicated Fraud Department, Function, or Team 38.6% $118,000 $250, % Independent Audit Committee 59.2% $125,000 $250, % Management Review 61.5% $138,000 $250, % Proactive Data Monitoring/Analysis 37.2% $112,000 $200, % Fraud Training for Employees 38.0% $118,000 $200, % Fraud Training for Managers/Executives 35.4% $128,000 $175, % Code of Conduct 79.2% $150,000 $188, % Management Certification of Financial Statements 79.7% $150,000 $175, % *Rewards for Whistleblowers was omitted from this table due to insufficient responses for median loss calculation.

11 Figure 11: Median Duration of Fraud Based on Presence of Anti-Fraud Controls* Control Percent of Cases Control in Place Control Not in Place Percent Reduction Employee Support Programs 77.0% 13 months 42 months 69.0% Dedicated Fraud Department, Function, or Team 38.6% 12 months 36 months 66.7% Internal Audit Department 64.7% 12 months 36 months 66.7% Independent Audit Committee 59.2% 13 months 36 months 63.9% External Audit of Internal Controls over Financial Reporting 65.8% 12 months 33 months 63.6% Hotline 52.5% 12 months 30 months 60.0% Management Review 61.5% 12 months 24 months 50.0% Surprise Audits 31.1% 12 months 24 months 50.0% Formal Fraud Risk Assessments 35.5% 12 months 24 months 50.0% Fraud Training for Managers/Executives 35.4% 12 months 24 months 50.0% Anti-Fraud Policy 39.0% 12 months 24 months 50.0% Fraud Training for Employees 38.0% 12 months 24 months 50.0% Job Rotation/Mandatory Vacation 16.2% 15 months 24 months 37.5% Proactive Data Monitoring/Analysis 37.2% 15 months 24 months 37.5% Management Certification of Financial Statements 79.7% 18 months 24 months 25.0% Code of Conduct 79.2% 24 months 24 months 0.0% External Audit of Financial Statements 83.3% 24 months 24 months 0.0% *Rewards for Whistleblowers was omitted from this table due to insufficient responses for median duration calculation.

12 Figure 12: Primary Internal Control Weakness Observed by CFE Lack of Independent Checks/Audits 3.6% Other 3.6% Lack of Competent Personnel in Oversight Roles 6.0% Lack of Internal Controls 31.0% Poor Tone at the Top 13.1% Override of Existing Internal Controls 25.0% 6.6% 2.9% Lack of Management Review 17.9%

13 Figure 13: Position of Perpetrator Frequency and Median Loss $900,000 50% $800, % $835,000 45% $700,000 40% MEDIAN LOSS $600,000 $500,000 $400,000 $300, % 30.5% 15.7% 19.5% 35% 30% 25% 20% 15% $200,000 $175,000 10% $100,000 $110, % 5% $0 Employee Manager Owner/Executive Other* 0% POSITION OF PERPETRATOR *Other category had insufficient responses for median loss calculation. Median Loss Percent of Cases

14 Figure 14: Department of Perpetrator Frequency Sales 20.7% Operations Accounting 14.6% 15.9% DEPARTMENT OF PERPETRATOR Executive/Upper Management 11.0% Customer Service 11.0% Purchasing 4.9% Warehousing/Inventory 3.7% Legal 3.7% Finance 3.7% Other 2.4% Marketing/Public Relations 2.4% Manufacturing and Production 2.4% Internal Audit 1.2% Information Technology 1.2% Human Resources 1.2% 0% 5% 10% 15% 20% 25%

15 Figure 15: Gender of Perpetrator Frequency Male 64.6% Female 35.4%

16 Figure 16: Gender of Perpetrator Median Loss GENDER OF PERPETRATOR Male $180,000 Female $85,000 $0 $50,000 $100,000 $150,000 $200,000 MEDIAN LOSS

17 Figure 17: Criminal Background of Perpetrator Other 4.1% Charged but Not Convicted 4.1% Had Prior Convictions 4.1% Never Charged or Convicted 89.8%

18 Figure 18: Employment Background of Perpetrator Other 10.5% Previously Terminated 7.9% Never Punished or Terminated 78.9% Previously Punished 7.9% 6.6% 2.9%

19 Figure 19: Cases Resulting in Referral to Law Enforcement or Civil Suit LEGAL ACTION TAKEN Referral to Law Enforcement Civil Suit 34.3% 58.7% 41.3% 65.7% Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

20 Figure 20: Recovery of Victim Organization s Losses PERCENT OF LOSS RECOVERED No Recovery 1 25% 26 50% 51 75% 76 99% 100% 7.9% 9.5% 7.9% 6.3% 7.9% 60.3% 0% 10% 20% 30% 40% 50% 60% 70%

21 Figure 21: Action Taken Against Perpetrator ACTION TAKEN AGAINST PERPETRATOR Termination Other No Punishment Settlement Agreement Perpetrator Was No Longer With Organization Probation or Suspension Permitted or Required Resignation 8.6% 7.4% 6.2% 4.9% 3.7% 18.5% 70.4% 0% 10% 20% 30% 40% 50% 60% 70% 80%