Fraud Statistics

It is sometimes said in jest that 42.7 percent of all statistics are made up on the spot and 3 percent exceeds 2 percent by 50 percent, not by 1 percent.

However, when it comes to fraud here are some provable facts and reliable statistics:

According to various studies conducted by the The Association of Certified Fraud Examiners (ACFE) in their 2010 Report to the Nations on Occupational Fraud and Abuse:

  • Approximately 95 percent of white collar criminals have no previous criminal record.
  • The higher the monetary value of the economic crime, the less likely it is that the perpetrator will have a previous criminal record.
  • Fraud committed by owners/executives was more than three times as costly as fraud committed by managers, and more than nine times as costly as employee fraud.

Who Commits Fraud and What Steps Limit the Damage?

According to a 2010 survey by ACFE, key fraud-prevention measures can mitigate losses significantly.

Number of Cases Based on Perpetrators' Department
Department Cases Percent Median
Loss
Accounting 367 22% $180,000
Operations 299 18% $105,000
Leadership 224 14% $829,000
Help Desk 120 7% $46,000
Purchasing 103 6% $500,000
Inventory Management 78 5% $239,000
Treasurer's Office 70 4% $450,000
Information Technology 47 3% $71,400
Oversight Boards 24 1% $800,000
HR/Payroll 22 1% $200,000
Legal 8 0.5% $566,000
 
Median Loss Based on Presence of Anti-Fraud Controls
Control Control
IN
Place
Control
NOT IN
Place
Percent
Reduction
Percent of
Cases
Implemented
Hotline $100,000 $245,000 59% 49%
Employee Support Programs $100,000 $244,000 59% 45%
Surprise Audits $97,000 $200,000 52% 29%
Fraud Training for Employees $100,000 $200,000 50% 40%
Fraud Training for Managers/Execs. $100,000 $200,000 50% 42%
Job Rotation $100,000 $188,000 47% 15%
Code of Conduct $140,000 $262,000 47% 70%
Anti-Fraud Policy $120,000 $200,000 40% 39%
Management Review $120,000 $200,000 40% 53%
Internal Audit $145,000 $209,000 31% 66%
Management Certification $150,000 $200,000 25% 59%
External Audit $150,000 $200,000 25% 76%

In the fight against fraud, governments, their management and personnel need to:

  1. Become aware of fraud and how it may manifest itself in an organization or operation.
  2. Realistically assess the risk of fraud with the understanding that fraud exists and that any organization or individual may be victimized. Reassess this risk periodically in light of changing resources, organizational structure and technology.
  3. Design controls to prevent, detect and correct fraud.
  4. Maintain appropriate segregation of duties — no single person should have control over all aspects of an accounting transaction.
  5. Document, test and monitor the controls that are in place.
  6. Use all resources at their disposal — policies, procedures, auditors, tools — to evaluate and improve controls.
  7. Understand that, even if you do not devote the energy and resources to find the vulnerabilities in your operations, fraudsters will — it’s how they make their living.
  8. Develop and display an appropriate tone at the top. Communicate this to staff, contractors, beneficiaries, etc. Let it be known that fraud will not be tolerated — at any level.
  9. Use whatever means they have to identify and prosecute perpetrators.