Occupational Fraud and Abuse 2016 Report by the ACFE Summary Findings

occupational-fraudThe Association of Certified Fraud Examiners (“ACFE”) published its annual report on occupational fraud and abuse covering the results from its survey analyzing the results of over 2400 cases of investigated fraud. This 92 page report is accessible online.

ACFE report, based on the surveyed cases, summarizes the:

  • annual per entity revenues loss
  • manner of fraud execution
  • Description of the typical characteristics of employees committing fraud
  • Description of the typical characteristics of organizations victimized by fraud

A summary of some of the salient observations, conclusions and reported losses are presented below. But for CEOs and business owners, the full impact of the dramatic effects of this study can only be appreciated by the deeper understanding of your organizational risk and vulnerability, enhanced by serious discussion with the organizations CPA/Financial Advisor.

  1. For the year, typical business losses were 5% of sales
  2. the average dollar loss per organization was $2.7 Million
  3. median loss per incident was $150,000, with over 20% of incidents resulting in losses of more than $1,000,000
  4. most common form of fraud was asset misappropriation consisting of billing schemes and check tampering
  5. perpetrator took steps to conceal fraud
  6. tips and hotlines are most common form of detection
  7. loses were mitigated when detection methods were more aggressive than passive methods
  8. level of perpetrator authority is related to size of fraud
  9. most frauds originate in bookkeeping and accounting areas
  10. most perpetrators exhibit behavioral warning signs
  11. organizational size is blind to occupational fraud risk

Business owners need to seriously take steps to protect the assets of the business. Any incident can be substantially more serious than it initially appears to be. Ask your CPA/Financial Advisor to provide feedback concerning your specific organization. The amount of the loss may only be the tip of total damages to a vulnerable organization.

Dennis P. Kremer, CPA/ABV/CFF/CGMA, CAA, CFE