Infographic: Key Findings from the ACFE's 2012 Report to the Nations

2012 GLOBAL FRAUD STUDY Report to the Nations on Occupational Fraud and Abuse Published by the Association of Certified Fraud Examiners (ACFE), this study on fraud and abuse in organizations aims to help businesses in their efforts to prevent, detect, or simply understand the global economic impact of occupational fraud. 34,275 1,388 100 Certified Fraud Examiners (CFES) were surveyed from October 2011 to Cases of occupational fraud were documented in this study. The number of countries in which these fraud offenses occurred. December 2011. Types of Occupational Fraud Occupational fraud schemes fall into three primary categories: 87% of Reported Cases 33% of Reported Cases 8% of Reported Cases ASSET MISAPPROPRIATION CORRUPTION FINANCIAL SCHEMES SCHEMES STATEMENT FRAUD -$120,000 -$250,000 -$1,000,000 Median Loss Median Loss Median Loss Profile of a Fraudster AUTHORITY TIME WITH COMPANY The higher the level of authority the fraudster has, the larger the fraud losses The longer a fraudster works for a company, the higher the fraud losses tend to be. tend to be. $573,000 $229,000 $25,000 average losses when employee was with $180,000 $60,000 average losses when employee company for 10+ years was with company for Employees Managers Owners/Executives one year EDUCATION DURATION OF FRAUD IN MONTHS BASED ON POSITION The higher the level of education the fraudster has, the larger the fraud losses Frauds committed by people in higher positions last longer than those in lower positions. tend to be. $300,000 $200,000 $75,000 12 24 24 Months Months Months High School Diploma Bachelor's Post-Graduate Degree Degree Employee Manager Owner/Executive Take note of these common 18% behavioral red flags of fraudsters have Catch a Fraudster excessive control 19% issues of fraudsters have unsually close In 81% of cases, the fraudster displayed one or more behavioral red flags that are often associated with fraud. 36% associations with vendors/customers of fraudsters live beyond their 27% means of fraudsters display behaviors that One or more behavioral flags displayed in suggest they have finar 81% of cases WORTH NOTING These red flags will generally not be identified by traditional internal controls. Managers, employees and auditors should be educated on these common behavioral patterns and encouraged to consider them to help identify patterns that might indicate fraudulent activity. 50% of tips reporting fraud come from employees of the victim organization Tips are the Most Common Way Fraud is Detected 22.1% of tips come from customers The majority of tips reporting fraud come from employees of the victim organization. Tools such as anonymous hotlines or web-based portals which allow individuals to report misconduct without fear of retaliation or of being identified can help facilitate this process. 12.4% of tips come from anonymous sources Fraud Prevention Smaller businesses are more vulnerable to fraud because they typically employ fewer anti-fraud controls. There are, however, some cost-effective measures that can be taken which greatly increase the ability to prevent and detect fraud. ESTABLISH FORMAL CODE OF CONDUCT COST-EFFECTIVE ANTI-FRAUD MEASURES 1. Code of Conduct FORMAL MANAGEMENT ANTI-FRAUD 2. Anti-fraud training programs 3. Formal management review of controls and processes REVIEW OF CONTROLS AND TRAINING PROGRAMS PROCESSES Proactive Measures The cost of occupational fraud – both financially and to an organization's reputation - can be devastating. With nearly half of victim organizations unable to recover losses, proactive anti-fraud measures are critical. TIP #1 TIP #2 TIP #3 HOTLINES AND WEB PORTALS FRAUD AWARENESS TRAINING BEHAVIORAL RED FLAGS Providing a means to report suspicious activity is a critical part of an anti-fraud program. Targeting fraud awareness training for employees and Learn to recognize behavioral traits that can serve as managers is a critical component of a well-rounded warning signs of fraudulent activity. program for preventing and detecting fraud. BSight SOURCE | Report to the Nations on Occupational Fraud and Abuse: 2012 Global Fraud Study i-Sight case management sofware simplifies the process of tracking and managing investigations, and gives you the reports you need to analyze results, demonstrate trends and prevent losses. This infographic is a creation of i-Sight based on the results of the 2012 Report to the Nations on Occupational Fraud and Abuse and is not a product of the Association of Certified Fraud Examiners. Get a free demo today. Visit www.i-Sight.com or call 1-800-465-6089