Profiling a White Collar Criminal
Gender, Age and Job Role Among Key Factors in Occupational Fraud, ACFE Report Finds
September 10, 2008 - AUSTIN, TX -- What type of person is most likely to commit fraud? According to a report published by the Association of Certified Fraud Examiners (ACFE), new research shows that men, 41-50 years old, working in an accounting department are the most common offenders.
The ACFE’s 2008 Report to the Nation on Occupational Fraud & Abuse examines the characteristics of fraud perpetrators as one aspect of its comprehensive look at the problem of fraud among U.S. organizations. In most cases, offenders are a trusted part of a team who take advantage of their situation to get their hands on company assets.
The Report provides benchmarking data compiled from 959 cases of occupational fraud that were investigated by Certified Fraud Examiners (CFEs) between January 2006 and February 2008. The Report examines different factors such as losses by industry, the effect of internal controls, and the average cost of different types of occupational fraud, with eye-opening statistics that paint a grim picture: participants in the survey estimated that U.S. organizations lose 7 percent of their annual revenues to fraud.
In the ACFE’s Report, the world’s premier provider of anti-fraud training and education found that:
Fraud is a man’s world. According to the survey, males are more than twice as likely to commit fraud as their female colleagues. Significantly, the median loss of fraud by men is more than twice as great as frauds perpetrated by women, according to the study. One hypothesis: the gender disparity might be due to the remaining “glass ceiling” phenomenon, with males holding more management and executive level positions – and having a greater opportunity to commit costly frauds.
Many fraudsters are in their forties. The highest percentage of fraudsters in the study were between the ages of 41-50 (in more than half of all cases, the perpetrator was over 40). Generally speaking, older professionals often occupy positions with authority and more access to company resources. The Report finds that the median loss from fraud rose as the age of the fraudster increased. Schemes perpetrated by individuals in their 50s resulted in a median loss of $500,000, twice as high as any age bracket below them.
The ‘lone wolf’ versus cooperative crooks. In nearly two-thirds of the fraud schemes covered by the study, the perpetrator acted alone. Yet when the scheme did involve collusion of two or more parties, the results were much more costly. Cases of collusion resulted in a median loss over four times higher than the amount lost to fraudsters acting alone. This might mean that collusion enables employees to better circumvent controls that might stop a single perpetrator.
Education and position. Most perpetrators have attended or graduated from college. About 11 percent have obtained a post-graduate degree. In general, the higher the education level, the more costly the fraud. Furthermore, the highest percentage of fraudsters worked in the accounting department when they executed their scheme. Because these employees handle financial transactions, they normally have the easiest access to fiscal assets and the most opportunity to conceal a fraud. Executives and upper management made up the second-most common category of fraudsters. The least common perpetrators? Internal auditors.
Living the fraud life. According to the Report, there are several behaviors that serve as red flags displayed by perpetrators. The two most common traits are a tendency to live beyond one’s means, and a struggle with financial difficulties. More than a third of those identified displayed at least one of the aforementioned behaviors, and about 20 percent had either a “wheeler-dealer attitude,” control issues (unwillingness to share duties), or personal problems, such as a divorce. Other red flags might include irritability or defensiveness, addiction problems, past legal problems, refusal to take vacation and complaining about inadequate pay.
The presence of these characteristics does not in and of itself signify that a fraud is occurring or will occur in the future. However, every organization needs anti-fraud professionals in their ranks who are trained to understand and identify the potential warning signs of fraudulent conduct. Certified Fraud Examiners provide the expertise needed to detect, prevent, and combat fraud at every level. Learn more about CFEs at www.ACFE.com.
The Report to the Nation is available for download online at the ACFE’s web site: www.ACFE.com/RTTN. The Report is in PDF format.
For further information, contact Scott Patterson: (512) 276-8156, firstname.lastname@example.org; or Alani Mundie: (512) 276-8177, email@example.com.
About the Report to the Nation
The first Report to the Nation was published by the ACFE in 1996. The ACFE has published subsequent editions in 2002, 2004, 2006, and now 2008, and over that time the Report has come to be regarded as the most authoritative statistical resource available on occupational fraud.
Contact the ACFE
For more information, email PR@ACFE.com.