OCCUPATIONAL FRAUD AND ABUSE

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. According to the report:
  • 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 counterparts do. Conversely, employers with more than 100 employees have a 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 some time to detect fraud. Financial statement fraud had a median duration of 27 months. Check-tampering, expense reimbursement, billing, and payroll scams 24 months; corruption, cash on hand, skimming, and larceny 18 months.

The list of fraud examples is instructive:

  1. Skimming a small percentage of cash payments or assets.
  2. Accepting payment from a customer, failing to record the sale and instead pocketing the money.
  3. Stealing cash and checks from daily receipts before they can be deposited into the bank.
  4. Creating a shell company and billing employer for services not actually rendered.
  5. Purchasing personal items and submitting invoices to employer for payment.
  6. Filing fraudulent expense reports for personal travel, nonexistent meals, etc.
  7. Stealing blank company checks, and making them out to themselves or an accomplice.
  8. Stealing outgoing checks to a vendor and depositing them into their own account.
  9. Claiming overtime for hours not worked.
  10. Adding ghost employees to the payroll.
  11. Fraudulently voiding a cash register sale and stealing the cash.
  12. Stealing inventory from a warehouse or storeroom.
  13. 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.

Click Here to read the report.

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