Fraud mitigation is well worth the investment compared with the cost of a fraud event for the average business, according to a new study compiled by the Assn. of Certified Fraud Examiners (ACFE), "Report to the Nations on Occupational Fraud and Abuse." The report includes data compiled from 1,483 cases of fraud submitted by CFEs globally.
|Among its findings about fraud and internal controls, the report observed:
- Median loss caused by frauds in the ACFE study was $145,000, and 22% involved losses of at least $1 million.
- Median duration–the amount of time from when the fraud began until detection– was 18 months.
- Frauds discovered by passive detection methods such as confessions, notification by law enforcement, external audit, and by accident, lasted longer and resulted in higher losses.
- By contrast, frauds discovered through proactive detection methods–such as hotlines, management review procedures, internal audits, and employee monitoring mechanisms–were caught sooner, with fewer financial losses.
The full report is available for download online at ACFE.com/RTTN.
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