NACFE Executive Summary Highlights

NATIONAL ASSOCIATION OF
CERTIFIED FRAUD EXAMINERS (CFEs)
“REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE IN 2012 EXECUTIVE SUMMARY HIGHLIGHTS”

1. Survey participants estimated that the typical organization loses 5% of its revenues to fraud each year.
2. The median loss caused by the occupational fraud cases in the study was $140,000.
3. The frauds reported to NACFE lasted a median of 18 months before being detected.
4. Asset misappropriation schemes were by far the most common type of occupational fraud, comprising 87% of the cases reported to NACFE.
5. Financial statement fraud schemes made up just 8% of the cases in the study, but had the greatest median loss at $1million.
6. Occupational fraud is more likely to be detected by a tip than by any other method.
7. Corruption and billing schemes pose the greatest risks to organizations throughout the world.
8. Occupational fraud is a significant threat to small business.
9. Industries most commonly victimized in the study were the banking and financial services, government and public administration, and manufacturing sectors.
10. The presence of anti-fraud controls is notably correlated with significant decreases in the cost and duration of occupational fraud schemes.
11. Perpetrators with higher levels of authority tend to cause much larger losses.
12. The longer a perpetrator has worked for an organization, the higher fraud losses tend to be.
13. The vast majority (77%) of all frauds in the study were committed by individuals working in one of six departments:
• Accounting
• Operations
• Sales
• Executive/upper management
• Customer service
• Purchasing.
14.Most occupational fraudsters are first-time offenders with clean employment histories.

SOURCES OF “TIPS” (THE MOST COMMON METHOD OF “DETECTION”)

• EMPLOYEES—50.9%
• CUSTOMERS—22.1%
• ANONYMOUS—12.4%
• OTHER—11.6%
• VENDOR—9.0%
• SHAREHOLDERS/OWNERS—2.3%
• COMPETITORS—1.5%

PERCENT OF CASES BY “TENURE OF PERPETRATOR”

• LESS THAN ONE YEAR—5.9%
• ONE TO FIVE YEARS—45.7%
• SIX TO TEN YEARS—27.2%
• MORE THAN TEN YEARS—25.3%

PERCENT OF CASES & MEDIAN LOSS BY “TYPE OF ORGANIZATION” VICTIM

• PRIVATE COMPANY—39.3%, $200,000
• PUBLIC COMPANY—28.0%, $127,000
• GOVERNMENT—16.8%, $81,000
• NOT-FOR-PROFIT—10.4%, $100,000
• OTHER—5.5%, $75,000