2014 ACFE REPORT TO THE NATIONS – OCCUPATIONAL FRAUD & ABUSE

    Fraud is ubiquitous; it does not discriminate in its occurrence and while anti-fraud controls can effectively reduce the likelihood and potential impact of fraud, the truth is that no entity is immune to this threat. Unfortunately, however, many organisations still suffer from an “it can’t happen here” mindset. To help combat this misconception, to raise public awareness about the cost and universal nature of fraud and to support anti-fraud professionals around the globe, the Association of Certified Fraud Examiners (“ACFE”) undertakes extensive research into the costs and trends related to fraud in the form of a survey which is released every two years¹.

    The data presented in the 2014 Report is based on 1,483 cases of occupational fraud² that were reported by the Certified Fraud Examiners (CFE’s) who investigated them. The frauds occurred in nearly 100 countries on six continents, (including Australia) and offer readers an interesting insight into the global nature of occupational fraud. Whilst, the full report can be accessed here, I have set out a summary of the report’s major findings below for your information:

    • Organisations lose an estimated 5% of total revenue to fraud each year,
    • The median loss caused by occupational fraud is $145,000, ($ on the 2012 survey)
    • More than 22% of the reported losses exceeded $1 million, (%  on the 2012 survey),
    • The frauds had been undertaken for an average of 18 months before being detected, (no change on the 2012 survey),
    • Asset misappropriation schemes were by far the most common type of occupational fraud, comprising 85% of the cases reported with a medium loss of $130,000, ($ on the 2012 survey),
    • Financial statement fraud schemes represented 9% of the cases in the study, but caused the greatest median loss at $1 million, (% on the 2012 survey)
    • Occupational fraud is more likely to be detected by a tip off than by any other method,
    • Occupational fraud is a significant threat to small businesses (those with < 100 employees)– suffering disproportionally larger losses with a median loss of $154,000.

    The ACFE is the world’s largest anti-fraud organization and premier provider of anti-fraud training and education. Together with nearly 75,000 members, the ACFE is reducing business fraud world-wide and inspiring public confidence in the integrity and objectivity within the profession. Please refer to www.acfe.com for further information on the ACFE.

    1. 2014 Report to the Nations
    2. The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets
    Steven Ponsonby is a Chartered Accountant FCA, a Certified Fraud Examiner CFE and Insolvency Practitioner RITP and is the founding Director of Forensic Accounting Pty Ltd, a leading independent forensic accounting practice, providing forensic accounting services and expertise to a broad spectrum of clients across Australia.

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