A Report to the Nation on Occupational Fraud and Abuse by the Association of Certified Fraud Examiners provides a wealth of valuable information for any company.
Organizations with fewer than 100 employees have a higher rate of fraud exposure to billing, check tampering, skimming, expense reimbursement, cash on hand, payroll, and larceny than their larger counterparts.
Conversely, employers with more than 100 employees have greater exposure to corruption and non-cash theft. The most common anti-fraud controls include audits, codes of conduct, management review, hotlines, and training.
Companies with 100 or more employees are almost twice as likely as smaller organizations to employ anti-fraud controls.
It generally takes time to detect fraud: financial statement fraud had a median duration of 27 months; check-tampering, expense reimbursement, billing, and payroll scams averaged about 24 months; corruption, cash on hand, skimming, and larceny tended to be detected in about 18 months.
Fraud examples
- Skimming a small percentage of cash payments or assets.
- Accepting payment from a customer, failing to record the sale and instead pocketing the money.
- Stealing cash and checks from daily receipts before they can be deposited into the bank.
- Creating a shell company and billing the employer for services not actually rendered.
- Purchasing personal items and submitting invoices to the employer for payment.
- Filing fraudulent expense reports for personal travel, nonexistent meals, etc.
- Stealing blank company checks, and making them out to themselves or an accomplice.
- Stealing outgoing checks to a vendor and depositing them into their own account.
- Claiming overtime for hours not worked.
- Adding ghost employees to the payroll.
- Fraudulently voiding a cash register sale and stealing the cash.
- Stealing inventory from a warehouse or storeroom.
- Stealing or misusing confidential customer financial information.
Nearly one in five frauds were exposed by tips from fellow workers. Many organizations provide employee-tip hotlines. Perhaps you should too.
Businesses that handle electronic payments or wire transfers may consider additional protections such as Wire Transfer Fraud (Crime) Insurance.
Service businesses with frequent cash or on-site transactions should review industry-specific coverage; for example, seasonal or event-based vendors can learn more from resources like Face and Body Painting Insurance: Liability and Coverage Guide.
Read the full ACFE report directly on the Association of Certified Fraud Examiners website for more detail and sample cases.
Frequently Asked Questions
How common is occupational fraud?
Occupational fraud occurs across organizations of all sizes, but types and frequency vary by industry and company size.
How long does it usually take to detect fraud?
Detection times vary by fraud type; many schemes go undetected for months or even years, depending on controls in place.
What is the most common way fraud is discovered?
Tips from employees are a leading source of fraud detection, followed by audits, management review, and external notifications.