AUSTIN, Texas, USA (March 30, 2016) –“Waste, fraud and
abuse” has become a pervasive soundbite in the 2016 U.S. presidential election,
but just how much fraud is actually occurring in the government? In a study of
2,410 occupational fraud cases investigated by Certified Fraud Examiners (CFEs)
between January 2014 and October 2015, 18.7 percent of the reported fraud
instances occurred in government entities. Although the instances of reported
fraud in the government occurred at an equal frequency between local, state and
federal government, cases that occurred on the federal level cost a median of
$194,000 each — a noticeably higher level than the median cost of fraud at the local
and state government levels ($80,000 and $100,000 respectively).
The Association of Certified Fraud Examiners (ACFE)
published the results of its most recent global fraud survey in its highly
anticipated 2016 Report to the Nations on
Occupational Fraud and Abuse. Other key findings from the 92-page report
include (all values in U.S. dollars):
incredibly costly. The total cost of the frauds reported in the study was
over $6.3 billion, with 23 percent of the cases costing more than $1 million.
The study respondents estimated that the typical organization loses 5 percent
of its annual revenue to fraud each year. When applied to the 2014 estimated
Gross World Product of $74.16 trillion, this translates to potential global
fraud losses of up to $3.7 trillion.
are especially at risk. The study found that organizations with fewer than
100 employees faced the same median cost per instance of fraud as companies
with more employees. However, less than half of the smaller organizations had
implemented some of the most basic anti-fraud controls like implementing a
fraud hotline, and establishing a management review and code of conduct.
becoming an expected control in most companies. In the study, CFEs reported
that 60.1 percent of the organizations they worked with had a fraud reporting hotline
in place, an 8.9 percent increase from the findings reported in 2010.
are still key components in fraud. For the first time, respondents were
asked how fraudsters attempted to cover their tracks. Even in such a technologically
driven world, fraudsters are still relying on creating fraudulent physical
documents, altering existing physical documents or destroying those documents.
The Report to the
Nations also details findings such as how fraud risks varied by industry,
how the implementation of anti-fraud controls affected exposure to fraud, the
breakdown of fraud statistics by geographical region and the most common
behavioral traits observed among fraud perpetrators.
The 2016 Report to
the Nations is available for download online at ACFE.com/RTTN.
The first Report to
the Nation was published by the ACFE in 1996. The ACFE has published
subsequent editions in 2002, 2004, 2006, 2008, 2010, 2012, 2014 and now 2016.
Over that time, the report has come to be regarded as the most authoritative
statistical resource available on occupational fraud.
Association of Certified Fraud Examiners
Founded in 1988, the ACFE is the world’s largest
anti-fraud organization and premier provider of anti-fraud training and education.
Together with more than 75,000 members, the ACFE is reducing business fraud
worldwide and inspiring public confidence in the integrity and objectivity
within the profession. For more information, visit ACFE.com.