The 2018 Report to the Nations on Occupational Fraud and Abuse, released to the public on April 17, is the largest and most comprehensive study of occupational fraud to date. CFEs who took part in the study estimate a typical organization loses 5 percent of its annual revenues to fraud. Applied to the estimated 2016 Gross World Product, this figure translates to potential global fraud losses approaching $4 trillion.
The report is based on 2,690 cases of occupational fraud that collectively caused more than $7 billion in actual damages. The frauds represented in the study were committed against organizations in 125 different countries across 23 major industry categories — ranging from small local businesses to multinational corporations with thousands of employees.
The report focuses on five critical aspects of occupational fraud cases: 1) the methods used to commit fraud 2) how the schemes were detected 3) the characteristics of the victim organizations 4) the characteristics of the perpetrators and 5) the results of cases after the frauds had been detected.
A copy of the report is included with this magazine. Find additional information and download a PDF at:
Key findings from the report include:
- Occupational fraud is extremely costly. Twenty-two percent of occupational frauds caused at least $1 million in losses.
- Fraud schemes can be very difficult to detect. The typical occupational fraud lasted 16 months before it was discovered.
- Tips are the most effective way to detect fraud. Forty percent of cases were detected by a tip — far more than by any other method.
- Anti-fraud controls work. Eighteen anti-fraud controls were analyzed, and every one correlated to lower fraud losses and faster fraud detection.
- High-level perpetrators do the most damage. The median loss in frauds committed by owners/executives was $850,000. Among non-owners/executives the median loss was $100,000.
- Criminal fraud referrals are declining. Over the past 10 years, the percentage of occupational frauds referred to law enforcement has declined by 16 percent.