April 1, 2024
Importance of Fraud Awareness Training
Fraud prevention is an essential component of any corporate risk management program. Limiting the opportunities for bad actors to commit illegal activities is necessary. To achieve this goal, various protections can and should be implemented. These include formal fraud risk assessments, surprise audits, mandatory job rotation/vacations, internal audits, financial statement audits, and anti-fraud policies. When updating your program, it is essential not to forget about fraud awareness training. According to the ACFE Occupational Fraud 2024 – Report to the Nations, it was found that training on the risks and costs of fraud helped reduce related losses and ensured schemes were identified more rapidly. It also helped to reduce losses incurred from schemes perpetrated by owners and executives. The benefits multiply quickly when this training is combined with other fraud prevention measures. To help clients, prospects, and others, Wilson Lewis has summarized the key details below.
- Fraud Training Trends—The overall trend in the number of organizations that provide fraud awareness training has increased significantly over the last eight years. Training provided to employees has increased to 63% (8% increase over 2016), and training provided to managers/executives has risen to 62% (11% increase over 2016). These increases reflect the additional importance and value of training to fight against fraud.
- Fraud Losses—Implementing the most effective anti-fraud controls is especially important for organizations with limited resources. The report found that companies that did not provide fraud training to employees or managers experienced losses nearly two times more per incident. The median loss in organizations that provided training was $100,000 per incident, compared to $199,000 in those that did not. It appears that fraud training offers important benefits.
- Fraud Tips – The report uncovered an interesting relationship between those who received training and fraud reporting. It was determined that tips are twice as likely to come from employees who have received awareness training. In fact, 67% of tips were reported by those who had previously received training, while only 33% came from those who had not. The learning activities empowered employees to understand better the signs of fraud and the importance of reporting it.
- Faster Fraud Detection – The increased training for managers and executives has led to speedier detection and lower losses. This is especially true regarding fraud perpetrated by owners and executives. The report found that in organizations that provide training the average duration of fraud was half as long as those that did not provide training (32 months v 18 months). It was also discovered the median loss per incident for those with training was $315,000 versus those without $600,000.
- Hotline & Training – Combining anti-fraud controls can lead to quicker detection times and reductions in fraud losses. It was found that when an organization offered training and a reporting hotline, there was a sharp reduction in fraud loss. Organizations that did not provide these experienced a median loss of $200,000 per incident. Those that offered both experienced a median loss of $100,000. The fact that losses doubled when training and a reporting hotline did not exist speaks to the potency of the combination.
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Amongst the various fraud prevention tactics, organizations should consider the case for fraud awareness training is undoubtedly a compelling one. Atlanta companies should seriously consider adding fraud training to their roster of prevention activities. If you have questions about the information outlined above or need assistance with fraud awareness training, 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.
