CFEs make significant advancements over past 10 years, 2022 Report to the Nations shows

CFEs are catching frauds faster than ever before — 33% faster now than they did in 2012, to be precise. At the same time, median losses from frauds have shrunk by 16% over the past 10 years. These are just some of the findings in the ACFE’s Occupational Fraud 2022: A Report to the Nations, showing how fraud examiners are upping their game and making all the difference in this ever-evolving field. (See ACFE.com/RTTN.)

In fact, in 2012, the median time it took CFEs to detect a fraud was 18 months, but now they’re discovering wrongdoing in just 12 months. In 2012, the median loss from fraud was $140,000, but in 2022 it was $117,000.

“It’s very encouraging to see we are catching frauds more quickly than we were 10 years ago,” says ACFE Chief Strategy Officer John Warren, J.D., CFE. “By catching them more quickly, we’re lowering median fraud losses. That speaks to the great work CFEs have done in raising awareness about fraud risk and improving tools to detect and prevent these crimes.”

Indeed, organizations have ramped up their anti-fraud efforts in the last 10 years, according to the report, with more organizations implementing anti-fraud controls, training employees on fraud, and adopting anti-fraud policies and formal risk assessments. Seventy percent of the victim organizations in the 2022 study had a hotline in place compared to 54% in 2012. Likewise, 61% provide fraud training for employees, up from 47% in 2012, and 60% have a fraud policy in the 2022 study, up from 47% in 2012. In 2012, 36% of victim organizations employed formal fraud risk assessments, but that number has jumped to 46% in the 2022 report.

Fraudsters up their game, too

But fraudsters have also upped their game, making the expertise of CFEs evermore crucial. According to the report, there are more perpetrators in roles with higher levels of authority. In 2022, 62% of fraudsters occupied manager/executive/owner roles versus 56% of fraudsters in 2012. And the percentage of occupational fraud cases involving corruption across the globe increased to 50% in 2022, from 33% in 2012. Moreover, fraudsters are working together more often than they were in 2012. While 42% of cases involved two or more perpetrators in 2012, that figure jumped to 58% of cases in 2022.

“There is still a long way to go; our data shows that fraud is still causing enormous harm to organizations around the world, taking away trillions of dollars that should be spent on jobs, infrastructure, services and benefits and putting that money in the pockets of criminals,” says Warren. “But what we see in our data is that our association and our profession is having a real impact.”

Changing landscape

Certainly, the occupational fraud landscape has seen significant change over the years, and one aspect of that evolving landscape concerns more organizations using cryptocurrency. For the first time, the Report to the Nations asked CFEs about frauds involving cryptocurrency and found that 8% of occupational frauds in the study involved this new technology. Forty-eight percent of those cases involved using cryptocurrency for bribes and kickback payments, while 43% involved using it to convert misappropriated assets. And while the percentage of cryptocurrency cases is currently small, we can expect to see more of these frauds in the future.

“The use of cryptocurrencies in fraud schemes will only increase going forward, so I’m glad we were able to establish a baseline for comparison,” says ACFE Research Manager Mason Wilder, CFE.

Pandemic-related factors

ACFE founder and Chairman Dr. Joseph T. Wells, CFE, CPA, first launched what was then called Report to the Nation in 1996. Since then, the survey has tracked significant developments in the anti-fraud field, but this is the first time a pandemic might have contributed to the frauds CFEs investigated. Fifty-two percent of the fraud cases in the 2022 report were affected by at least one pandemic-related factor, with organizational staffing changes (42%) and the shift to remote work (15%) being the most commonly cited factors.

But ACFE’s Vice President of Education Andi McNeal, CFE, cautions we still have much to learn about COVID-19’s effect on fraud, and only subsequent Report to the Nations surveys will be able to reveal a clearer picture of how the pandemic might have exacerbated occupational fraud. “Because frauds often take months or years to detect, many of the cases in our current study were perpetrated before COVID hit,” she says.

“Even so, more than half of the cases were affected by pandemic-related factors in some way, with changes in staffing, processes and controls at the top of the list. So, our findings give us a really insightful view into how the pandemic has affected fraud risks, fraud examinations and organizations’ fraud programs over the last two years.”