ACFE Publishes 2024 Report to the Nations

Earlier this month, the Association of Certified Fraud Examiners (ACFE) issued Occupational Fraud 2024: A Report to the Nations. This is the 13^th installation of the largest global study on occupational fraud and includes information about the costs, schemes, victims, and perpetrators of fraud. To limit the potential for criminal activities and financial loss, management needs to regularly evaluate and update fraud prevention programs to ensure maximum effectiveness. The findings contained in the report, including changes to how tips are reported, should be carefully considered. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.

About the Report

The information included in the report is based on the results of the ACFE 2023 Global Fraud Survey, conducted from July 2023 to September 2023. Respondents were asked to provide information about the single most significant fraud case investigated. To be included, the case must have involved occupational fraud, the investigation occurred between January 2022 and the time of the survey, the investigation must be completed, and the respondent must be reasonably sure the perpetrator(s) have been identified.

Participants were asked 86 questions regarding various aspects of the case. This included information about the perpetrator, victim organization, types of fraud used, and fraud trends in general. Over 7,450 responses were received, but only 1,921 were used for the report.

Key Fraud Findings

• Behavioral Red Flags – It was determined that 75% of fraudsters displayed at least one of the most common behavioral clues. The most common were living beyond means found in 39% of cases, financial difficulties (27%), unusually close association with a vendor/customer (20%), control issues (13%), irritability (12%), and a wheeler-dealer attitude (12%). Honorable mentions include bullying/intimidation and divorce/family problems.
• Gender Differences in Red Flags – The report found differences in the most common red flag behaviors between genders. For females, the most common warning signs include living beyond means (41%), financial difficulties (31%), and divorce/family problems (14%). For males, the warning signs include living beyond means (39%), financial difficulties (26%), and unusually close association with a vendor/customer (22%). While there are some differences, it is interesting to note that living beyond one’s means is the top indicator of fraud, regardless of gender.
• Fraud Detection – According to the report, 43% of fraud schemes were discovered thanks to employee, customer, and vendor tips. This is over three times as many cases as the most common method. More than half the tips (52%) come from employees, while customers (21%) and vendors (11%) account for nearly one-third. Finally, the most common methods of reporting include web-based (40%), email (37%), and telephone (30%). Interestingly, both web and email-based exceeded telephone reporting.
• Departments Affected by Fraud – The report noted that more than half of all cases used in the report came from five departments. This includes operations (14%), accounting (12%), sales (12%), customer service (9%), and executive/upper management (9%). Armed with this information, companies can develop anti-fraud controls and training that target employees working in these areas.
• Level of Authority and Loss – The report examined the most common levels of authority and the corresponding loss amount. Most fraudsters were either employees or managers, but there were also cases reported where ownership was involved. The highest median loss ($500,000) ocurred when an owner/executive engaged in fraud, managers ($184,000 median loss), and employees ($60,000 median loss). Those with the most authority can do the most damage. Yet, how many anti-fraud controls target individuals at the highest levels?
• Tenure – It was also discovered that those with the longest tenure committed the costliest fraud schemes. Cases involving those who have worked at an organization for ten or more years had a median loss of $250,000. Those with 6 to 10 years ($137,000), 1 to 5 years ($100,000), and one year or less ($50,000).

Contact Us

The findings uncovered in the 2024 report provide valuable information for those creating or upgrading fraud prevention programs. This information can guide management on updates or improvements which can have a substantial impact on prevention. If you have questions about the information outlined above or need assistance with your fraud prevention program, Wilson Lewis can help. For additional information, call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.