figure 1: occupational frauds by category—frequency · 0% 5% 10% 15% 20% 25% 30% 35% register...

Figure 1: Occupational Frauds by Category—Frequency

© 2016 Association of Certified Fraud Examiners, Inc. All rights reserved.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

FinancialStatement Fraud

Corruption

AssetMisappropriation

TY

PE

OF

FR

AU

D

P E R C E N T O F C A S E S

89.5%

26.7%

12.8%

Figure 2: Occupational Frauds by Category—Median Loss


$0 $200,000 $400,000 $600,000

Financial Statement Fraud

Corruption

Asset Misappropriation

TY

PE

OF

FR

AU

D

M E D I A N L O S S

$173,000

$250,000

$500,000

0% 5% 10% 15% 20% 25% 30% 35%

Register Disbursements

Payroll

Cash Larceny

Skimming

Check Tampering

Cash on Hand

Financial Statement Fraud

Non-Cash

Expense Reimbursements

Corruption

Billing

SC

HE

ME

TY

PE


29.1%

26.7%

17.4%

16.3%

12.8%

11.6%

11.6%

11.6%

10.5%

10.5%

5.8%

Figure 3: Frequency of Fraud Schemes


0% 5% 10% 15% 20% 25% 30% 35%

Confession

IT Controls

Notified by Law Enforcement

External Audit

Document Examination

Account Reconciliation

By Accident

Other

Internal Audit

Management Review

Tip

DE

TE

CT

ION

ME

TH

OD


32.6%

20.9%

9.3%

7.0%

3.5%

3.5%

2.3%

2.3%

1.2%

1.2%

16.3%

Figure 4: Initial Detection of Occupational Frauds


0% 10% 20% 30% 40% 50% 60%

Document Examination

Other

By Accident

Management Review

Internal Audit

Tip

DE

TE

CT

ION

ME

TH

OD


50.0%

14.3%

14.3%

7.1%

7.1%

4.8%

13.2%

21.1%

31.6%

10.5%

5.3%

Organizations With Hotlines

Organizations Without Hotlines2.6%

Figure 5: Impact of Hotlines on the Top Six Detection Methods



Figure 6: Type of Victim Organization—Frequency and Median Loss

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

Other*Not-for-Profit*Public CompanyGovernmentPrivate Company0%

5%

10%

15%

20%

25%

30%

35%

40%

T Y P E O F V I C T I M O R G A N I Z AT I O N

ME

DIA

N L

OS

SP

ER

CE

NT

OF

CA

SE

S

Percent of CasesMedian Loss

$300,000

$148,000

$125,000

37.2%

25.6%24.4%

7.0%5.8%

*Not-for-Profit and Other categories had insufficient responses for median loss calculation.

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

10,000+1,000–9,999100–999<100

N U M B E R O F E M P L O Y E E S

ME

DIA

N L

OS

SP

ER

CE

NT

OF

CA

SE

S


$300,000

$180,000

$86,000

0%

5%

10%

15%

20%

25%

30%

35%

30.1%

15.7%

28.9%

25.3%

$110,000

Figure 7: Size of Victim Organization—Frequency and Median Loss


0% 2% 4% 6% 8% 10% 12% 14% 16%Services (Professional)

Utilities

Agriculture, Forestry, Fishing, and Hunting

Arts, Entertainment, and Recreation

Other

Real Estate

Services (Other)

Technology

Telecommunications

Wholesale Trade

Mining

Oil and Gas

Education

Transportation and Warehousing

Insurance

Manufacturing

Retail

Construction

Health Care

Government and Public Administration

Banking and Financial Services

IND

US

TR

Y


15.1%

14.0%

9.3%

7.0%

5.8%

5.8%

5.8%

4.7%

4.7%

3.5%

3.5%

2.3%

2.3%

2.3%

2.3%

2.3%

2.3%

2.3%

2.3%

1.2%

1.2%

Figure 8: Industry of Victim Organization


0% 20% 40% 60% 80% 100%Rewards for Whistleblowers

Job Rotation/Mandatory Vacation

Surprise Audits

Fraud Training for Managers/Executives

Formal Fraud Risk Assessments

Proactive Data Monitoring/Analysis

Fraud Training for Employees

Dedicated Fraud Department, Function, or Team

Anti-Fraud Policy

Hotline

Independent Audit Committee

Management Review

Internal Audit Department

External Audit of ICOFR

Employee Support Programs

Code of Conduct

Management Certification of F/S

External Audit of F/S

AN

TI-

FR

AU

D C

ON

TR

OL


79.7%

79.2%

83.3%

77.0%

65.8%

64.7%

61.5%

59.2%

52.5%

39.0%

38.6%

38.0%

37.2%

35.5%

35.4%

31.1%

16.2%

8.0%

Figure 9: Frequency of Anti-Fraud Controls


Key:

External Audit of F/S = Independent External Audits of the Organization’s Financial Statements

Management Certification of F/S = Management Certification of the Organization’s Financial Statements

External Audit of ICOFR = Independent External Audits of the Organization’s Internal Controls Over Financial Reporting

Control Percent of Cases Control in Place Control Not in Place Percent Reduction

Job Rotation/Mandatory Vacation 16.2% $16,000 $250,000 93.6%

External Audit of Financial Statements 83.3% $135,000 $750,000 82.0%

Internal Audit Department 64.7% $112,000 $396,000 71.7%

Surprise Audits 31.1% $80,000 $250,000 68.0%

Formal Fraud Risk Assessments 35.5% $80,000 $250,000 68.0%

Employee Support Programs 77.0% $125,000 $350,000 64.3%

Anti-Fraud Policy 39.0% $98,000 $250,000 60.8%

Hotline 52.5% $111,000 $250,000 55.6%

External Audit of Internal Controls over Financial Reporting 65.8% $111,000 $250,000 55.6%

Dedicated Fraud Department, Function, or Team 38.6% $118,000 $250,000 52.8%

Independent Audit Committee 59.2% $125,000 $250,000 50.0%

Management Review 61.5% $138,000 $250,000 44.8%

Proactive Data Monitoring/Analysis 37.2% $112,000 $200,000 44.0%

Fraud Training for Employees 38.0% $118,000 $200,000 41.0%

Fraud Training for Managers/Executives 35.4% $128,000 $175,000 26.9%

Code of Conduct 79.2% $150,000 $188,000 20.2%

Management Certification of Financial Statements 79.7% $150,000 $175,000 14.3%

*Rewards for Whistleblowers was omitted from this table due to insufficient responses for median loss calculation.

Figure 10: Median Loss Based on Presence of Anti-Fraud Controls*


Control Percent of Cases Control in Place Control Not in Place Percent Reduction

Employee Support Programs 77.0% 13 months 42 months 69.0%

Dedicated Fraud Department, Function, or Team 38.6% 12 months 36 months 66.7%

Internal Audit Department 64.7% 12 months 36 months 66.7%

Independent Audit Committee 59.2% 13 months 36 months 63.9%

External Audit of Internal Controls over Financial Reporting 65.8% 12 months 33 months 63.6%

Hotline 52.5% 12 months 30 months 60.0%

Management Review 61.5% 12 months 24 months 50.0%

Surprise Audits 31.1% 12 months 24 months 50.0%

Formal Fraud Risk Assessments 35.5% 12 months 24 months 50.0%

Fraud Training for Managers/Executives 35.4% 12 months 24 months 50.0%

Anti-Fraud Policy 39.0% 12 months 24 months 50.0%

Fraud Training for Employees 38.0% 12 months 24 months 50.0%

Job Rotation/Mandatory Vacation 16.2% 15 months 24 months 37.5%

Proactive Data Monitoring/Analysis 37.2% 15 months 24 months 37.5%

Management Certification of Financial Statements 79.7% 18 months 24 months 25.0%

Code of Conduct 79.2% 24 months 24 months 0.0%

External Audit of Financial Statements 83.3% 24 months 24 months 0.0%

*Rewards for Whistleblowers was omitted from this table due to insufficient responses for median duration calculation.


Figure 11: Median Duration of Fraud Based on Presence of Anti-Fraud Controls*

6.6% 2.9%Lack of Management Review

17.9%Override of Existing Internal Controls25.0%

Lack of Internal Controls 31.0% Poor Tone at the Top

13.1%

Lack of Competent Personnel in Oversight Roles6.0%

Other3.6%

Lack of Independent Checks/Audits3.6%

Figure 12: Primary Internal Control Weakness Observed by CFE


Figure 13: Position of Perpetrator—Frequency and Median Loss


$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

Other*Owner/ExecutiveManagerEmployee

ME

DIA

N L

OS

SP

ER

CE

NT

OF

CA

SE

S


$110,000

$175,000

$835,000

30.1%

15.7%

45.1%

30.5%

19.5%

4.9%

P O S I T I O N O F P E R P E T R AT O R

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

*Other category had insufficient responses for median loss calculation.

0% 5% 10% 15% 20% 25%

Human Resources

Information Technology

Internal Audit

Manufacturing and Production

Marketing/Public Relations

Other

Finance

Legal

Warehousing/Inventory

Purchasing

Customer Service

Executive/Upper Management

Accounting

Operations

Sales

DE

PA

RT

ME

NT

OF

PE

RP

ET

RA

TO

R


14.6%

11.0%

11.0%

4.9%

3.7%

3.7%

3.7%

2.4%

2.4%

2.4%

1.2%

1.2%

1.2%

20.7%

15.9%

Figure 14: Department of Perpetrator—Frequency


Male 64.6%

Female35.4%


Figure 15: Gender of Perpetrator—Frequency

$0 $50,000 $100,000 $150,000 $200,000

Female

Male

GE

ND

ER

OF

PE

RP

ET

RA

TO

R

M E D I A N L O S S

$85,000

$180,000

Figure 16: Gender of Perpetrator—Median Loss


Never Charged or Convicted89.8%

Had Prior Convictions4.1%

Charged but Not Convicted4.1%

Other4.1%

Figure 17: Criminal Background of Perpetrator


6.6% 2.9%

Never Punished or Terminated78.9%

Previously Punished7.9%

Previously Terminated7.9%

Other10.5%

Figure 18: Employment Background of Perpetrator


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Civil Suit

Referral to Law Enforcement

LE

GA

L A

CT

ION

TA

KE

N


65.7%

No

Yes

58.7% 41.3%

34.3%

Figure 19: Cases Resulting in Referral to Law Enforcement or Civil Suit


0% 10% 20% 30% 40% 50% 60% 70%

100%

76–99%

51–75%

26–50%

1–25%

No Recovery

PE

RC

EN

T O

F L

OS

S R

EC

OV

ER

ED


60.3%

7.9%

9.5%

7.9%

6.3%

7.9%

Figure 20: Recovery of Victim Organization’s Losses


0% 10% 20% 30% 40% 50% 60% 70% 80%

Permitted or RequiredResignation

Probation or Suspension

Perpetrator Was No LongerWith Organization

Settlement Agreement

No Punishment

Other

Termination

AC

TIO

N T

AK

EN

AG

AIN

ST

PE

RP

ET

RA

TO

R


3.7%

4.9%

6.2%

7.4%

8.6%

18.5%

70.4%

Figure 21: Action Taken Against Perpetrator


figure 1: occupational frauds by category—frequency · 0% 5% 10% 15% 20% 25% 30% 35% register...

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