<img src="https://ws.zoominfo.com/pixel/BUJfPb8NrEnpjSiz8kRz" width="1" height="1" style="display: none;">
Fraud

Why No Organization is Immune to Fraud

on December 22, 2021

Organizations around the world lose approximately five percent of their annual revenues to financial fraud, according to a survey by The Association of Certified Fraud Examiners (ACFE). The data can be surprising and gains the attention of anti-fraud practitioners, organizational leaders, and financial managers. Here, we reference 11 statistics that prove no organization is immune to the misrepresentation of financial assets.

 

But first, what is fraud?

Fraud can be defined as a deliberate misrepresentation to gain an advantage over another party. According to the ACFE, they are perpetrated by individuals or organizations to obtain money, property, or services; to avoid payment or loss of services, or to secure personal or business advantage. It comes in many different forms, including financial statements, the misappropriation of assets (theft) and cover-ups. Below, read how asset misappropriation is seen across the organization.

  

Did you know that:

  1. Organizations lose an average of 7% of gross revenue to fraud each year?
  2. The most common method by which fraud is detected is tips? Over 46% of cases detected are reported via a tip from an employee, vendor, or whistle-blower.
  3. Fraudulent financial reporting is twice as common in organizations as billing schemes?
  4. Organizations that implement entity-wide fraud awareness training cut losses by 52%.
  5. 74% of employees report that they have observed or have firsthand knowledge of wrongdoing in their organization in the past 12 months.
  6. The average fraudulent financial reporting costs the victim organization $2 million, while the average loss per incident of billing fraud is only $100,000.
  7. The majority of public companies investigated by the Securities and Exchange Commission (SEC) for fraud subsequently suffer a substantial decline in stock price (50% or more).
  8. It takes an average of 24 months for a fraud to be detected.
  9. One-third of large-organization executives say they have no documented investigative policies or procedures for fraud, and one-half have no incident response plan.
  10. One-quarter of companies consider themselves highly vulnerable to information theft, and 29% have experienced information theft, loss, or attack in the past three years.
  11. The most common type of fraud affecting institutions, by far, is theft of assets—which can include money, services, or physical assets.

Every organization should have a well-established risk mitigation strategy in place to ensure due diligence in the detection and prevention of occupational fraud. While using internal controls and manual auditing is helpful, this is not a complete solution.  Continuous monitoring is imperative, and the use of systems to identify potential cash leakage, gaps in approval processes, risky vendors, and inappropriate spend is now readily available. Annual fraud awareness training for all employees should also be required. 

 

Want to learn more about Oversight capabilities? Subscribe and follow along with our Nothing Gets by You Now Blog Series or visit our website to learn more about how our AI platform can help you automate manual processes and empower you to See It All. Spot The Patterns. Steer The Future.

 

1 Work Cited: Goldmann, Peter. “Anti-Fraud Risk and Control Workbook: Goldmann, Peter, Kaufman, Hilton: 9780470496534.” com, Wiley, July 2009, https://www.amazon.com/Anti-Fraud-Control-Workbook-Peter-Goldmann/dp/0470496533. Accessed 9 December 2021.

 

Mara Maddox

Senior Marketing Communications Manager

READ MORE OF WHAT YOU LIKE.