16 May 2012
The certainties of death and taxes seem joined now by the ubiquity of fraud. Year on year there are numerous surveys including those by KPMG, Ernst & Young, and Deloitte that disclose the growing instance of fraud.
The findings in the United States Association of Certified Fraud Examiners’ Report to the Nation published last week seem to confirm the pattern of those other surveys.
Some average statistics include;
  • Organisation’s lose 5% of their revenue to fraud – globally this would total approximately $3.5 trillion.
  • The median loss was $140,000 and nearly half of victim organisations recover nothing.
  • Frauds last for about 18 months before detection.
  • Most detection of fraud follows from a tipoff – increasing to more than 43% from 40% in 2010.
Only banks and financial institutions lose more to fraud than government and public administration.
Offenders with higher levels of authority cause larger levels of loss – executives take $573,000, managers take $180,000 and employees take $60,000.
More than 77% of fraud occurs in six business areas – accounting, operations, sales, upper management, customer services or purchasing.
Most fraudsters are first offenders – with 87% never previously having been charged with an offence before detected for a fraud.
ACFE identifies behavioural “red flags” as;
  • living beyond means (36%)
  • financial difficulties (27%)
  • unusually close relationships with vendors/customers (19%)
  • excessive “control issues” (18%).
Edward Gibbon Wakefield, considered a fraudster by sections of colonial New Zealand, died today in 1862.