$2.9 trillion lost to fraud annually

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Globally, businesses and other organizations lose about 5 percent of their annual revenue to fraud – that’s more than $2.9 trillion.

Information from certified fraud examiners in 106 nations was used for benchmarking statistics on occupational fraud losses, detection methods and perpetrators, for the Association of Certified Fraud Examiners’ 2010 Report to the Nations on Occupational Fraud & Abuse.

Since 2002, the biannual report has evolved to draw more meaningful information from the experiences of CFEs and the frauds they encounter.

“Fraud knows no boundaries, and anti-fraud professionals worldwide face more challenges than ever in detecting and combating it,” said ACFE President James D. Ratley.

Key findings from the 84-page report include:

• Fraud schemes are extremely costly. The median loss caused by the occupational fraud cases in the ACFE study was $160,000. Nearly one-quarter of the frauds involved losses of at least $1 million.

• Schemes can continue for months or even years before they are detected. The frauds in the study lasted a median of 18 months before being caught.

• Occupational fraud is a global problem. Though some findings differ slightly from region to region, most of the trends in fraud schemes, perpetrator characteristics and anti-fraud controls are similar regardless of where the fraud occurred.

• Tips are key in detecting fraud. Occupational frauds are much more likely to be detected by tip than by any other means. This finding has been consistent since 2002, when the ACFE began tracking data on fraud detection methods.

• High-level perpetrators do the most damage. Frauds committed by owners and executives were more than three times as costly as frauds committed by managers, and more than nine times as costly as employee frauds. Executive-level frauds also took much longer to detect.

• Small businesses are especially vulnerable to occupational fraud. These organizations are typically lacking in anti-fraud controls compared to their larger counterparts, which makes them particularly vulnerable to fraud.

Included in the report is information about how organizations were affected based upon industry, how the implementation of anti-fraud controls affected exposure to fraud, the breakdown of fraud statistics by geographical region and the most common behavioral traits observed among fraud perpetrators.

To view the full report, visit ACFE.com/RTTN