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FRAUD ALERT
Occupational Fraud - The Latest Statistics
September 2008
The annual cost of occupational fraud schemes on businesses, healthcare systems, and other types of organizations is substantial. The Association of Certified Fraud Examiners' recently released its 2008 Report to the Nation on Occupational Fraud & Abuse, which identifies the types of schemes being used to defraud organizations. The 2008 survey is based on data compiled from 959 actual fraud cases that occurred between January 2006 and February 2008.

The following are some of the highlights:
  • US organizations lose approximately 7% of their revenue each year to various types of fraud schemes. This equates to a staggering $994 billion annually.
  • Asset misappropriations are the most common types of occupational fraud schemes.  Common examples included: falsifying invoices, inappropriate payroll disbursements, and skimming.
  • The median loss was $175,000. However, more than 60% of the fraud schemes resulted in losses of at least $100,000 and more than a fourth involved losses of at least $1 million.
  • Smaller businesses (those with less than 100 employees) suffer bigger losses. The median loss for small businesses was $200,000 (as compared to the $175,000 above). Although most small businesses have fewer resources to devote to fraud prevention, the financial impact from such a loss to these organizations can be devastating.
  • Fraud schemes are detected more frequently by tips than by any other means. Therefore, it is important to have appropriate systems and procedures in place that allow employees to confidentially report suspicious activity.
  • Most fraudsters are first-time offenders and most work in the accounting department or are upper management. Over one third of fraudsters in the 2008 survey were between the ages of 41 and 50.

Occupational fraud schemes are difficult to detect because they are generally committed by trusted employees in positions of authority and often involve collusion with others. However, fraud risk can be managed with a properly designed fraud prevention program that is embraced and enforced by top management.

For more information about occupational fraud or to find out how ValuePoint Consulting Group can assist your organization with preventing and detecting fraud, contact Jim Lloyd or Carol Carden at (866) 270-0544.