on occupational fraud and abuse · 2016-08-19 · provide a more robust analysis of occupational...

2016 CANADIAN EDITION

REPORT TO THE NATIONS O N O C C U P AT I O N A L F R A U D A N D A B U S E

2 REPORT TO THE NATIONS: CANADIAN EDITION

ContentsIntroduction .............................................................................................................3

How Occupational Fraud Is Committed ........................................................................4Frequency and Median Loss of Occupational Fraud Schemes ........................................................................... 4

Detection of Fraud Schemes ..................................................................................7Initial Detection of Occupational Frauds .............................................................................................................. 7

Impact of Hotlines ................................................................................................................................................ 8

Victim Organizations ...............................................................................................9Type of Organization ............................................................................................................................................ 9

Size of Organization ........................................................................................................................................... 10

Industry of Organization ..................................................................................................................................... 11

Anti-Fraud Controls at the Victim Organization ................................................................................................. 12Effectiveness of Controls ............................................................................................................................... 13Internal Control Weaknesses That Contributed to Fraud ........................................................................................ 15

Perpetrators ...........................................................................................................16Perpetrator’s Position ......................................................................................................................................... 17

Perpetrator’s Department .................................................................................................................................. 18

Perpetrator’s Gender .......................................................................................................................................... 19

Perpetrator’s Criminal and Employment History ............................................................................................... 20Perpetrator’s Criminal Background ................................................................................................................ 20Perpetrator’s Employment History ................................................................................................................. 21

Behavioral Red Flags Displayed by Perpetrators ............................................................................................... 22

Case Results ..........................................................................................................23Criminal Prosecutions and Civil Suits ................................................................................................................ 23

Recovery of Losses ............................................................................................................................................ 24

Action Taken Against Perpetrator ....................................................................................................................... 25

Methodology .........................................................................................................26Analysis Methodology ....................................................................................................................................... 26

About the ACFE .....................................................................................................27

REPORT TO THE NATIONS: CANADIAN EDITION 3

Introduction

Fraud is a global issue, but it also can present unique

problems in different regions. While the ACFE’s 2016

Report to the Nations on Occupational Fraud and Abuse

contains several regional comparisons, we wanted to

provide a more robust analysis of occupational fraud

trends in these areas. Consequently, we present this

regional report that provides a closer view of the Canadian

cases in our study.

For this report, we looked at 86 cases of occupational

fraud against victim organizations in Canada, occurring

between January 2014 and October 2015. Many of our

analyses involve median loss amounts, which respondents

reported in U.S. dollars (USD).

This report contains information on the specific fraud

schemes, victim organizations’ demographics and controls,

detection techniques, fraud perpetrators, and case results.1

Our hope is that readers will use this and our other regional

reports to help tailor fraud prevention and investigation

strategies to the risks in their respective regions.

1 For a glossary of terms used in this report, please see page 90 of the 2016 Report to the Nations on Occupational Fraud and Abuse.

http://www.acfe.com/rttn





How Occupational Fraud Is Committed

Frequency and Median Loss of Occupational Fraud Schemes Occupational fraud schemes can be broken down into

three primary categories: asset misappropriation,

corruption, and financial statement fraud. Of these, asset

misappropriation schemes were by far the most common

form of occupational frauds among the cases in Canada,

which is consistent with both our previous findings

and our global data for 2016. Nearly 90% of Canadian

cases involved the misappropriation of organizational

assets; however, these schemes also caused the smallest

median loss of the three categories, at USD 173,000 per

scheme. In contrast, financial statement frauds were the

costliest type of occupational fraud, with a median loss

of USD 500,000, but were the least common, occurring in

fewer than 13% of cases. Corruption schemes fell in the

middle in both measures, at 26.7% of cases and with a

median loss of USD 250,000.



Figure 1: Occupational Frauds by Category—Frequency

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

median duration for All Canadian Cases

24 months

median loss for All Canadian Cases

USD 154,000



To expand the analysis of the types of occupational frauds that affect Canadian organizations, we further broke down

the asset misappropriation cases into nine sub-categories; Figure 3 illustrates the frequency of these fraud schemes

along with the other two primary categories (corruption and financial statement fraud) for comparison purposes. More

than 29% of cases involved billing schemes, making this the most common scheme type perpetrated by the Canadian

fraudsters in our study.

Figure 3: Frequency of Fraud Schemes

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%

Concealment of Fraud SchemesIn addition to gathering information about how the frauds were perpetrated, we also asked survey respondents how the perpetrators attempted to conceal their schemes. While the sample size of cases from Canada in which concealment methods were provided was quite small, illustrated below are the four most common methods used by the perpetrators in our study.

Altered Physical Documents

Destroyed Physical Documents

Created Fraudulent Transactions in the Accounting System

Created Fraudulent Physical Documents


Initial Detection of Occupational FraudsWe asked respondents to identify how the occupational

fraud schemes were initially detected, and the results are

shown in Figure 4. The most common detection method

among Canadian cases was tips (32.6%), followed by

management review (20.9%) and internal audit (16.3%).

These were also the three most common methods of detec-

tion in our global study.

Detection of Fraud Schemes

Figure 4: Initial Detection of Occupational Frauds

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%


Detection of Fraud Schemes

Impact of HotlinesWe also analyzed how the presence of a reporting hotline affected the method by which fraud was initially detected;

the results of this analysis are shown in Figure 5. While we generally expect the presence of a reporting mechanism to

increase the likelihood of detection by tip, the contrast between organizations with and without hotlines was stark. Half

of the fraud cases in Canada at organizations with a hotline were detected by a tip, compared to only 13.2% of cases at

organizations without a hotline in place. Management review and internal audit were the top two detection methods at

organizations without hotlines.

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

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%

Top Three Sources of TipsUnderstanding where tips of fraudulent conduct tend to originate helps organizations tailor their anti-fraud reporting and training pro-grams to be more effective. In cases that were detected by tip, we asked survey respondents to identify the source. The infographic below shows the top three sources in Canada, which include employees (42.9%), customers (17.1%), and vendors (11.4%). While reporting hotlines are commonly designed for employees, this data shows that a significant number of tips come from other parties, something that we also found in our global study. This indicates that in order to maximize the effectiveness of anti-fraud hotlines, organizations should consider promoting those hotlines to external parties such as customers and vendors.

EMPLOYEE43%

CUSTOMER17%

VENDOR11%


Victim Organizations

As part of our survey, we asked respondents to provide

information about the organization that was victimized by

the fraud scheme, including the entity’s type, size, and

industry, as well as the mechanisms the organization had

in place to help prevent and detect fraud.

Type of OrganizationFigure 6 depicts both the median loss and percent of cases

based on the type of organization that was victimized.

Privately held companies and government agencies com-

bined represented more than half of the cases reported to us.

These organizations also suffered the highest median losses

per case, at USD 300,000 and USD 148,000, respectively.

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.



Size of OrganizationSmall organizations (defined as those with fewer than 100 employees for purposes of this report) were the most common

victims in our study, representing approximately 30% of Canadian cases reported to us. Small businesses also suffered

the greatest median loss of USD 300,000 per case—nearly three times the median loss experienced by the largest

victim organizations (USD 110,000). Compounding this disparity is that small businesses would likely feel the impact of

such a loss much more than larger organizations would.

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

$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



Industry of OrganizationFigure 8 categorizes the cases reported to us by industry of the victim organization. Banking and financial services,

government and public administration, and health care were the most represented sectors in the fraud cases we

examined. However, while this data shows the distribution of cases from our survey, it does not necessarily suggest

that certain industries are more at risk of fraud than others. Our data was collected through a survey of Certified Fraud

Examiners (CFEs), so this distribution primarily reflects the industries for which CFEs typically provide services.

Figure 8: Industry of Victim Organization

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%



Anti-Fraud Controls at the Victim OrganizationWe asked survey respondents which, if any, of several anti-fraud controls were in place at the victim organization at the

time the fraud occurred. External audits of the organization’s financial statements were the most commonly implemented

control. As reflected in Figure 9, 83.3% of Canadian victim organizations in our study had their financial statements audited

by an independent auditor. Other common controls among these organizations were management certification of the

financial statements and a formal code of conduct. Interestingly, employee support programs were much more common

among organizations in Canada than in any other region in our global study. This initiative can help address pressures

that employees face, which—when combined with opportunity and rationalization—often lead to occupational fraud.

Figure 9: Frequency of Anti-Fraud Controls

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%

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



Effectiveness of ControlsTo explore the effectiveness of various anti-fraud controls, we compared cases where a certain control had been in

place at the time of fraud versus cases where the control was missing. We then measured the size of the loss and the

duration of the fraud in each group. As shown in Figure 10, the presence of each control was associated with a lower

median loss. Similarly, all but two controls corresponded with quicker fraud detection (see Figure 11).

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

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 11: Median Duration of Fraud 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.



Internal Control Weaknesses That Contributed to FraudSurvey respondents also provided information about the internal control breakdowns that contributed to the fraud.

A straightforward lack of controls was primarily to blame in more than 30% of Canadian cases, making this the top

contributing factor. In one-quarter of the frauds, existing controls were overridden by the perpetrator, and in nearly 18%

of cases, a lack of managerial oversight allowed the scheme to occur.

Figure 12: Primary Internal Control Weakness Observed by CFE

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%


Perpetrators

We asked survey respondents to provide information about

the fraud perpetrators they investigated, including the

fraudster’s level of authority, the department where he or

she worked, the perpetrator’s gender, and the behavioral

signs that the fraudster had exhibited prior to or

during commission of the fraud.2

2 In cases where more than one perpetrator was involved, the data on perpetrators relates to the principal perpetrator, which we defined as the person who worked for the victim organiza-tion and who was the primary culprit.


Perpetrators

Perpetrator’s PositionThe fraudster’s level of authority within an organization was strongly correlated with the size of the fraud, as shown in

Figure 13. Only 19.5% of occupational frauds in our Canadian dataset were committed by owner/executives, but these

cases resulted in a median loss of USD 835,000, which was significantly higher than the losses caused by employees

or managers. This result was consistent with our global data and with prior studies; high-level fraudsters tend to have

greater ability to override internal controls and greater access to organizational resources and thus typically cause

greater financial damage when they commit fraud.

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.


Perpetrators

Perpetrator’s DepartmentFigure 14 shows the departments where Canadian fraudsters worked within their organizations. The most common source

of occupational fraud was the sales department, which was identified in more than one-fifth of our Canadian cases. The

sales department was followed by operations, accounting, executive/upper management, and customer service, each of

which was identified in more than 10% of all cases. These were also the five departments most commonly associated

with occupational fraud in our global report.

Figure 14: Department of Perpetrator—Frequency

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%


Perpetrators

Perpetrator’s GenderApproximately 65% of occupational frauds in our Canadian cases were committed by males, as shown in Figure 15.

While the disparity between male and female fraudsters in Canada was large, it was actually lower than in most other

regions. We found in our global study that males were responsible for 69% of occupational frauds worldwide, and Canada

had the second-lowest rate of male fraudsters among the nine regions we examined.

Figure 15: Gender of Perpetrator—Frequency

Male 64.6%

Female35.4%

Losses caused by male fraudsters were significantly higher than those caused by females (see Figure 16). The disparity

in median loss based on gender has been consistent since we began tracking this data in 1996.

Figure 16: Gender of Perpetrator—Median Loss

$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


Perpetrators

Perpetrator’s Criminal and Employment History

Perpetrator’s Criminal BackgroundOnly 4.1% of occupational fraudsters in the Canadian cases in our study had been previously convicted of a fraud-related

offense (see Figure 17). Historically, we have found that very few occupational fraud perpetrators have prior fraud

convictions. It should be noted, though, that in more than 41% of Canadian cases in our study, the fraud was never

reported to law enforcement (see Figure 19 on page 24). This suggests that the number of occupational fraudsters who

are repeat offenders may be higher than the conviction data would indicate.

Figure 17: Criminal Background of Perpetrator

Never Charged or Convicted89.8%

Had Prior Convictions4.1%

Charged but Not Convicted4.1%

Other4.1%

PROFILE OF OCCUPATIONAL FRAUDSTERS IN CANADA

55% 59%

Education: University degree or higher

Tenure: More than 5 years

Collusion: cases with 2 or more perpetrators

39%

MEDIAN LOSS IN COLLUSION CASES WAS 121% HIGHER THAN IN SINGLE-PERPETRATOR SCHEMES.

Median Age: 40


Perpetrators

Perpetrator’s Employment HistoryApproximately 8% of fraud perpetrators had been previously terminated by an employer for fraud-related conduct, and

approximately 8% had previously received some other form of punishment, such as a suspension or reprimand, for

fraud-related activity. This also suggests that the number of occupational fraudsters who are repeat offenders is higher

than prior criminal conviction data would indicate.

Figure 18: Employment Background of Perpetrator

6.6% 2.9%

Never Punished or Terminated78.9%

Previously Punished7.9%

Previously Terminated7.9%

Other10.5%


Perpetrators

Behavioral Red Flags Displayed by Perpetrators

OCCUPATIONAL FRAUD PERPETRATORS OFTEN EXHIBIT CERTAIN BEHAVIORAL CHARACTERISTICS ASSOCIATED WITH THEIR CRIMES. The following behavioral red flags were identified in at least 20% of Canadian fraud cases in our study:

Irritability, Suspiciousness, or Defensiveness

24%56%

Living Beyond Means

financial difficulties

32%

Divorce/Family Problems

Wheeler-Dealer Attitude

21%

Complained About InadequatePay

20% 20%

46% OF CANADIAN OCCUPATIONAL FRAUDSTERS HAD COMMITTED SOME FORM OF NON-FRAUD WORKPLACE VIOLATION DURING OR PRIOR TO THEIR FRAUDS.The most common non-fraud violations were:

31%

Bullying or Intimidation Excessive TardinessExcessive Absenteeism

15% 9%


Case Results

Criminal Prosecutions and Civil SuitsWe asked respondents about the outcome of their fraud

cases, including whether the cases were referred to law

enforcement for criminal prosecution or pursued in civil

court. Figure 19 shows that 58.7% of Canadian cases

were referred to law enforcement, which is very similar

to the criminal prosecution rate in our global study (59.3%).

Conversely, 34.3% of cases in Canada resulted in civil

litigation, which was about 11% higher than the rate of

civil litigation in our global report.


Case Results

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

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%

Recovery of LossesDetecting and investigating fraud is crucial to mitigate current losses and to serve as a deterrent against future frauds.

However, our study suggests that organizations are rarely made whole through fraud recovery efforts, even when the

perpetrator is identified. In fact, more than 60% of organizations in Canada recovered no losses resulting from the

fraud. Only 7.9% of organizations obtained a full recovery.

Figure 20: Recovery of Victim Organization’s Losses

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%


Case Results

Action Taken Against PerpetratorRecovering assets is not the only goal of a fraud examination. It is also important to identify perpetrators at the organization

and take appropriate disciplinary action against them. As shown in Figure 21, approximately 70% of Canadian victim

organizations terminated the perpetrator. Interestingly, the third-most common response among Canadian cases was

for the perpetrator to receive no punishment. In our global report, “no punishment” ranked last among these possible

responses to fraud.

Figure 21: Action Taken Against Perpetrator

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%


Methodology

This report is based on the results of the 2015 Global

Fraud Survey, an online survey opened to 41,788 Certified

Fraud Examiners (CFEs) from July 2015 to October 2015.

As part of the survey, respondents were asked to provide

a detailed narrative of the single largest fraud case they

had investigated since January 2014. Additionally, after

completing the survey the first time, respondents were

provided the option to submit information about a second

case that they investigated. Cases submitted were required

to meet the following four criteria:

1. The case must have involved occupational fraud

(defined as internal fraud, or fraud committed by a

person against the organization for which he or she

works).

2. The investigation must have occurred between

January 2014 and the time of survey participation.

3. The investigation must have been complete at the

time of survey participation.

4. The respondent must have been reasonably sure

the perpetrator(s) was (were) identified.

Respondents were then presented with questions regarding

the particular details of the fraud case, including information

about the perpetrator, the victim organization, and the

methods of fraud employed, as well as fraud trends in

general. We received 7,497 total responses to the survey,

2,410 of which were usable for purposes of our global

study. Of these usable responses, 86 involved occupational

fraud cases perpetrated against organizations in Canada;

the data contained in this report is based solely on the

information provided in these 86 responses.

Analysis MethodologyIn calculating the percentages discussed throughout

this report, we used the total number of complete and

relevant responses for the question(s) being analyzed.

Specifically, we excluded any blank responses or instanc-

es where the participant indicated that he or she did not

know the answer to a question. Consequently, the total

number of cases included in each analysis varies. In

addition, several survey questions allowed participants to

select more than one answer. Therefore, the sum of per-

centages in certain figures throughout the report exceeds

100%. Additionally, all charts throughout the report

include only those categories for which we received at

least one response from survey participants.

All loss amounts discussed throughout the report are

calculated using median loss rather than mean, or average,

loss. Additionally, we excluded median loss calculations for

categories for which there were fewer than ten responses.

Because the direct losses caused by financial statement

frauds are typically spread among numerous stakeholders,

obtaining an accurate estimate for this amount is extremely

difficult. Consequently, for schemes involving financial

statement fraud, we asked survey participants to provide

the gross amount of the financial statement misstatement

(over- or under-statement) involved in the scheme. All

losses reported for financial statement frauds throughout

this report are based on those reported amounts.


About the ACFE

Founded in 1988 by Dr. Joseph T. Wells, CFE, CPA, the

ACFE is the world’s largest anti-fraud organization and

premier provider of anti-fraud training and education.

Together with more than 75,000 members in more than

150 countries, the ACFE is reducing business fraud

worldwide and providing the training and resources

needed to fight fraud more effectively.

The ACFE provides educational tools and practical solutions

for anti-fraud professionals through initiatives including:

• Global conferences and seminars led by anti-fraud

experts

• Instructor-led, interactive professional training

• Comprehensive resources for fighting fraud,

including books, self-study courses and articles

• Leading anti-fraud publications, including Fraud

Magazine™, The Fraud Examiner and FraudInfo

• Local networking and support through more than

170 ACFE chapters worldwide

• Anti-fraud curriculum and educational tools for

colleges and universities

The positive effects of anti-fraud training are far-reaching

Clearly, the best way to combat fraud is to educate

anyone engaged in fighting fraud on how to effectively

prevent, detect and investigate it. By educating, uniting

and supporting the global anti-fraud community with the

tools to fight fraud more effectively, the ACFE is reducing

business fraud worldwide and inspiring public confi-

dence in the integrity and objectivity of the profession.

The ACFE offers its members the opportunity for profes-

sional certification. The Certified Fraud Examiner (CFE)

credential is preferred by businesses and government

entities around the world and indicates expertise in fraud

prevention and detection.

MembershipImmediate access to world-class anti-fraud knowledge

and tools is a necessity in the fight against fraud.

Members of the ACFE include accountants, internal audi-

tors, fraud investigators, law enforcement officers, lawyers,

business leaders, risk/compliance professionals and educa-

tors, all of whom have access to expert training, educational

tools and resources. More than 75,000 members from

all over the world have come to depend on the ACFE for

solutions to the challenges they face in their professions.

Whether their career is focused exclusively on preventing

and detecting fraudulent activities or they just want to learn

more about fraud, the ACFE provides the essential tools

and resources necessary for anti-fraud professionals to

accomplish their objectives. To learn more, visit ACFE.com

or call (800) 245-3321 / +1 (512) 478-9000.

Certified Fraud ExaminersCertified Fraud Examiners (CFEs) are anti-fraud experts

who have demonstrated knowledge in four critical areas:

Financial Transactions and Fraud Schemes, Law, Investi-

gation, and Fraud Prevention and Deterrence. In support

of CFEs and the CFE credential, the ACFE:

• Provides bona fide qualifications for CFEs through

administration of the CFE Exam

• Requires CFEs to adhere to a strict code of profes-

sional conduct and ethics

• Serves as the global representative for CFEs to busi-

ness, government and academic institutions

• Provides leadership to inspire public confidence in

the integrity, objectivity and professionalism of CFEs

CERTIFIED FRAUD EXAMINER

http://ACFE.com

© 2016 Association of Certified Fraud Examiners, Inc.

“ACFE,” “CFE,” “Association of Certified Fraud Examiners,” the ACFE Seal, and the ACFE Logo are trademarks owned by the Association of Certified Fraud Examiners, Inc. (“ACFE”) and registered in Canada. These marks, along with “Certified Fraud Examiner,” “Report to the Nations” and other related trademarks, names and logos are the property of the Association of Certified Fraud Examiners, Inc., and are registered and/or used in the U.S. and countries around the world.

GLOBAL HEADQUARTERS • THE GREGOR BUILDING716 West Ave • Austin, TX 78701-2727 • USAPhone: (800) 245-3321 / +1 (512) 478-9000Web: ACFE.com • [email protected]

http://ACFE.com