Figure 1: Breakdown of Cases by Country

Transcription

1 Figure 1: Breakdown of Cases by Country Country Number of Cases Albania 1 Armenia 3 Bulgaria 5 Czech Republic 8 Hungary 2 Kazakhstan 5 Kosovo 1 Montenegro 2 Poland 8 Romania 11 Russia 21 Serbia 4 Slovakia 8 Slovenia 2 Turkey 15 Ukraine 2

2 Figure 2: Occupational Frauds by Category Frequency TYPE OF FRAUD Asset Misappropriation Corruption Financial Statement Fraud 17.3% 55.1% 74.5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

3 Figure 3: Occupational Frauds by Category Median Loss TYPE OF FRAUD Asset Misappropriation Corruption Financial Statement Fraud $131,000 $200,000 $530,000 $0 $200,000 $400,000 $600,000 MEDIAN LOSS

4 Figure 4: Frequency of Fraud Schemes Corruption 55.1% Billing Non-Cash Financial Statement Fraud 18.4% 18.4% 17.3% SCHEME TYPE Expense Reimbursements Cash on Hand Cash Larceny Payroll Check Tampering Register Disbursements Skimming 10.2% 10.2% 7.1% 6.1% 4.1% 3.1% 2.0% 0% 10% 20% 30% 40% 50% 60%

5 Figure 5: Initial Detection of Occupational Frauds Tip 47.4% Internal Audit 20.6% Management Review 12.4% DETECTION METHOD Other Account Reconciliation By Accident Confession External Audit Document Examination Surveillance/Monitoring Notified by Law Enforcement IT Controls 6.2% 4.1% 2.1% 2.1% 1.0% 1.0% 1.0% 1.0% 1.0% 0% 10% 20% 30% 40% 50%

6 Figure 6: Source of Tips Employee 50.0% Customer 23.9% SOURCE OF TIPS Anonymous Vendor Competitor 6.5% 6.5% 19.6% Other 4.3% Shareholder/Owner 2.2% 0% 10% 20% 30% 40% 50% 60%

7 Figure 7: Impact of Hotlines on the Top Five Detection Methods Tip 37.5% 53.3% DETECTION METHOD Internal Audit Management Review Account Reconciliation 6.7% 5.0% 3.1% 21.7% 18.8% 21.9% Organizations With Hotlines By Accident 3.3% 0.0% Organizations Without Hotlines 0% 10% 20% 30% 40% 50% 60%

8 Figure 8: Type of Victim Organization Frequency and Median Loss $ % $ % $300,000 50% MEDIAN LOSS $ $ $ $ $131, % 40% 30% 20% $50000 $0 Private Company Public Company 5.1% Government* 3.1% Not-for-Profit* 5.1% Other* 10% 0% TYPE OF VICTIM ORGANIZATION Median Loss Percent of Cases *Government, Other, and Not-for-Profit categories had insufficient responses for median loss calculation.

9 Figure 9: Size of Victim Organization Frequency and Median Loss MEDIAN LOSS $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $220, % $250, % 42.1% $377, % 45% 40% 35% 30% 25% 20% 15% 10% $50,000 $50,000 5% $0 < ,000 9,999 10,000+ 0% NUMBER OF EMPLOYEES Median Loss Percent of Cases

10 Figure 10: Industry of Victim Organization Banking and Financial Services 27.6% INDUSTRY Manufacturing 12.2% Oil and Gas 8.2% Telecommunications 7.1% Other 7.1% Health Care 5.1% Government and Public Administration 5.1% Construction 5.1% Wholesale Trade 4.1% Services (Other) 4.1% Retail 4.1% Services (Professional) 2.0% Education 2.0% Utilities 1.0% Transportation and Warehousing 1.0% Technology 1.0% Real Estate 1.0% Arts, Entertainment, and Recreation 1.0% Agriculture, Forestry, Fishing, and Hunting 1.0% 0% 5% 10% 15% 20% 25% 30%

11 Figure 11: Frequency of Anti-Fraud Controls ANTI-FRAUD CONTROL Code of Conduct 90.9% External Audit of Financial Statements 88.2% Internal Audit Department 82.8% Management Certification of Financial Statements 75.0% Independent Audit Committee 70.3% Management Review 70.1% External Audit of Internal Controls over Financial Reporting 69.4% Hotline 65.6% Anti-Fraud Policy 61.4% Fraud Training for Employees 60.5% Fraud Training for Managers/Executives 56.8% Dedicated Fraud Department, Function, or Team 50.0% Formal Fraud Risk Assessments 45.3% Proactive Data Monitoring/Analysis 39.0% Surprise Audits 35.3% Employee Support Programs 28.6% Job Rotation/Mandatory Vacation 17.6% Rewards for Whistleblowers 1.1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

12 Figure 12: Median Loss Based on Presence of Anti-Fraud Controls Control Percent of Cases Control in Place Control Not in Place Percent Reduction Independent Audit Committee 70.3% $100,000 $1,100, % Management Certification of Financial Statements 75.0% $100,000 $925, % Hotline 65.6% $112,000 $850, % Dedicated Fraud Department, Function, or Team 50.0% $79,000 $500, % Management Review 70.1% $107,000 $675, % Fraud Training for Managers/Executives 56.8% $113,000 $700, % Fraud Training for Employees 60.5% $106,000 $550, % Surprise Audits 35.3% $60,000 $240, % Anti-Fraud Policy 61.4% $100,000 $375, % Job Rotation/Mandatory Vacation 17.6% $74,000 $275, % Employee Support Programs 28.6% $67,000 $215, % Proactive Data Monitoring/Analysis 39.0% $100,000 $270, % Formal Fraud Risk Assessments 45.3% $114,000 $300, % External Audit of Internal Controls over Financial Reporting 69.4% $132,000 $270, % Internal Audit Department 82.8% $141,000 $265, % External Audit of Financial Statements 88.2% $150,000 $150, % Code of Conduct 90.9% $150,000 * Rewards for Whistleblowers 1.1% * $200,000 *Category had insufficient responses for median loss calculation.

13 Figure 13: Median Duration of Fraud Based on Presence of Anti-Fraud Controls Control Percent of Cases Control in Place Control Not in Place Percent Reduction Surprise Audits 35.3% 13 months 20 months 35.0% Employee Support Programs 28.6% 13 months 20 months 35.0% Hotline 65.6% 17 months 26 months 34.6% Internal Audit Department 82.8% 18 months 26 months 30.8% Independent Audit Committee 70.3% 18 months 25 months 28.0% External Audit of Internal Controls over Financial Reporting 69.4% 18 months 25 months 28.0% Job Rotation/Mandatory Vacation 17.6% 17 months 23 months 26.1% Management Certification of Financial Statements 75.0% 18 months 24 months 25.0% Management Review 70.1% 18 months 24 months 25.0% Dedicated Fraud Department, Function, or Team 50.0% 18 months 24 months 25.0% Formal Fraud Risk Assessments 45.3% 18 months 24 months 25.0% Proactive Data Monitoring/Analysis 39.0% 18 months 24 months 25.0% Anti-Fraud Policy 61.4% 18 months 22 months 18.2% Fraud Training for Employees 60.5% 20 months 24 months 16.7% Fraud Training for Managers/Executives 56.8% 20 months 24 months 16.7% External Audit of Financial Statements 88.2% 20 months 16 months -25.0% Code of Conduct 90.9% 20 months * Rewards for Whistleblowers 1.1% * 20 months *Category had insufficient responses for median duration calculation.

14 Figure 14: Primary Internal Control Weakness Observed by CFE Lack of Competent Personnel in Oversight Roles 2.1% Lack of Independent Checks/Audits 5.2% Other 7.3% Lack of Employee Fraud Education 2.1% Lack of Clear Lines of Authority 1.0% Override of Existing Internal Controls 33.3% Lack of Management Review 15.6% 6.6% 2.9% Poor Tone at the Top 16.7% Lack of Internal Controls 16.7%

15 Figure 15: Position of Perpetrator Frequency and Median Loss $1,200, % 40% $1,000, % $1,000,000 35% 30% MEDIAN LOSS $800,000 $600,000 $400, % 25% 20% 15% 10% $200,000 $50,000 $116, % 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

16 Figure 16: Department of Perpetrator Frequency Sales 25.3% Executive/Upper Management 18.7% Other 9.9% DEPARTMENT OF PERPETRATOR Purchasing Customer Service Operations Accounting Warehousing/Inventory Board of Directors Manufacturing and Production Marketing/Public Relations Information Technology 3.3% 2.2% 2.2% 1.1% 5.5% 5.5% 6.6% 8.8% 8.8% Finance 1.1% Legal 1.1% 0% 5% 10% 15% 20% 25% 30%

17 Figure 17: Gender of Perpetrator Frequency Female 20.9% Male 79.1%

18 Figure 18: Gender of Perpetrator Median Loss GENDER OF PERPETRATOR Male $245,000 Female $99,000 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 MEDIAN LOSS

19 Figure 19: Criminal Background of Perpetrator Other 1.4% Had Prior Convictions 2.9% Charged But Not Convicted 4.3% Never Charged or Convicted 91.4%

20 Figure 20: Employment Background of Perpetrator Previously Terminated 1.8% Other 3.6% Previously Punished 7.3% Never Punished or Terminated 89.1% 6.6% 2.9%

21 Figure 21: Cases Resulting in Referral to Law Enforcement or Civil Suit LEGAL ACTION TAKEN Referral to Law Enforcement Civil Suit 20.7% 48.8% 51.2% 79.3% Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

22 Figure 22: Recovery of Victim Organization s Losses PERCENT OF LOSS RECOVERED No Recovery 1 25% 26 50% 51 75% 76 99% 100% 1.5% 6.0% 11.9% 10.4% 11.9% 58.2% 0% 10% 20% 30% 40% 50% 60% 70%

23 Figure 23: Action Taken Against Perpetrator ACTION TAKEN AGAINST PERPETRATOR Termination Permitted or Required Resignation Settlement Agreement Probation or Suspension Other Perpetrator Was No Longer With Organization No Punishment 14.8% 13.6% 12.5% 9.1% 6.8% 5.7% 60.2% 0% 10% 20% 30% 40% 50% 60% 70%