“The Association of Certified Fraud Examiners’ (ACFE) 2014 Global Fraud Study revealed that the typical organization loses a median of 5% of revenues each year due to fraud. On a global scale, this translates to losses of approximately $3.7 trillion, according to anti-fraud experts. In addition to lost revenue, there are also indirect costs, such as low employee morale, decreased productivity, ruined reputations and tarnished brand images, all resulting from employee and employer fraud.”
Small Companies Suffer Greater Monetary Losses
“While both large and small organizations fall victim to occupational fraud, the ACFE found that companies with fewer than 100 employees are particularly vulnerable compared to their larger counterparts. Whereas larger companies were more likely to have anti-fraud practices in place—such as hotlines, employee fraud training and internal departmental audits—smaller companies were less likely to implement similar anti-fraud controls that typically detect fraud sooner.”
Who’s Committing Occupational Fraud?
It’s important to note that fraudsters can be found across a range of occupations, from doctors and lawyers, to regular employees and ordinary individuals. Even more eye opening is the fact that most occupational fraudsters—roughly 87%—are first-time offenders with clean employment histories.
Nevertheless, an ACFE study found that 77% of occupational frauds were committed by employees working in accounting, operations, sales, executive management, customer service, purchasing or finance. As for sectors, banking and financial services, government and public administration and manufacturing tended to have the largest number of fraud cases, while mining, oil and gas, and real estate reported the largest median fraud losses.