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© 2016 Association of Certified Fraud Examiners, Inc. Report to the Nations on Occupational Fraud and Abuse

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Page 1: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc.

Report to the Nations on Occupational Fraud and Abuse

Page 2: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc.

Report to the Nations

Biennial study: 1996 – 2016 Occupational Fraud

• Costs• Methods• Detection• Victims• Perpetrators• Case Results

Practitioner Focused

Page 3: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc.

Global Fraud Survey• Online survey

• 41,788 CFEs• 2,410 usable responses

• Actual case investigated in last 2 years• 81 questions plus sub-questions• Respondents:

• Median 10 years’ fraud examination experience• 57% investigated > 5 cases

• 56% in house• 26% professional services• 13% law enforcement

• Review and analysis by ACFE Research

Page 4: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc.

IFP Database Approaching 10,000 records 421 columns of data >1.3 million populated data cells Tremendous amount of unmined

information Organized/scrubbed and formatted for

research purposes

http://r20.rs6.net/tn.jsp?e=001uyYTtPcxg0Xo-jdRjF0pi4bekey0aOtmV5OqRT7h1GERzs7mt04p2OApPm_aFqlm6V2_jsNZawEnWDEqeq5IF2qvRHnmMbakBJutBnnhtXI=
Page 5: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc.

IFP Dataset

Scheme types (20) $ losses Duration Concealment

techniques (14) Detection methods

(11) Org. type, size and

industry Anti-fraud controls

(18)

Control weaknesses Countries (>100) Perp employment

data Perp demographics Behavioral red flags

(17) Non-fraud misconduct

(13) Case results Recoveries

Page 6: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc.

Behavioral Red Flags

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%

Instability in Life Circumstances

Complained About Lack of Authority

Excessive Family/Peer Pressure for Success

Other

Past Legal Problems

Social Isolation

Past Employment-Related Problems

Excessive Pressure from Within Organization

Refusal to Take Vacations

No Behavioral Red Flags

Complained About Inadequate Pay

Addiction Problems

Irritability, Suspiciousness, or Defensiveness

Divorce/Family Problems

Control Issues, Unwillingness to Share Duties

"Wheeler-Dealer" Attitude

Unusually Close Assoication with…

Financial Difficulties

Living Beyond Means

PERCENT OF CASES

BEHA

VIO

RAL R

ED F

LAG

Behavioral Red Flags Displayed by Perpetrators

2016

2014

2012

Page 7: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc. 7

Position of Perpetrator Based on Gender

Page 8: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc. 8

Behavioral Red Flags Based on Perpetrator’s Gender

Page 9: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc. 9

Non-Fraud-Related Misconduct

Page 10: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc.

Scheme Combinations

4.8%

3.5%

8.6%

25.6%

57.4%

15.9%

7.3%

16.8%

30.2%

29.7%

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

Five+

Four

Three

Two

One

PERCENT OF CASES

NU

MBE

R O

F SC

HEM

ESNumber of Different Fraud Schemes Utilized

FSF Cases

All Cases

Page 11: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc.

Scheme Combinations

3.4%

7.8%

13.4%

13.4%

14.7%

15.1%

15.5%

18.5%

25.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Register Disbursements

Payroll

Cash Larceny

Check Tampering

Skimming

Expense Reimbursements

Cash on Hand

Billing

Non-Cash

PERCENT OF CASES

SCHE

ME

TYPE

Asset Misappropriation Schemes Utilized in Addition to FSF

Page 12: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc. 12

Party to Whom Whistleblower Initially Reported

Page 13: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc. 13

Collusion Based on Perpetrators’ Relationship to Victim

Page 14: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc. 14

The Impact of Collusion

Page 15: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc. 15

Collusion Based on Perpetrators’ Relationship to Victim

Page 16: on Occupational Fraud and Abuse - CARE · Scheme types (20) $ losses Duration Concealment techniques (14) Detection methods (11) Org. type, size and industry Anti-fraud controls

© 2016 Association of Certified Fraud Examiners, Inc. 16

Initial Detection of Occupational Frauds


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