Occupational Fraud Updates

Saul is a Certified Fraud Examiner, which designation is issued by the Association of Certified Fraud Examiners. The Association of Certified Fraud Examiners (ACFE) is the world’s largest anti-fraud organization (as per the ACFE’s website). Saul was twice-elected as the President of the Orange County (California) Chapter of the ACFE.

Below are some excerpts from “Occupational Fraud 2024: A Report to the Nations” published by the Association of Certified Fraud Examiners. The report can be found here: https://www.acfe.com/-/media/files/acfe/pdfs/rttn/2024/2024-report-to-the-nations.pdf

“The Association of Certified Fraud Examiners (ACFE) has been committed to the mission of combating occupational fraud—fraud committed by individuals against the organizations that employ them¹—since its founding in 1988. Occupational fraud represents a significant risk to the operations of every organization, regardless of size, industry, or region, with wideranging impacts for organizations victimized by this prevalent form of financial crime.”

From “Occupational Fraud 2024: A Report to the Nations” published by the Association of Certified Fraud Examiners.

“Due to the nature of occupational fraud, each of the estimated 3.55 billion members of the global workforce² has the potential to engage in this crime, as their employers entrust them with organizational cash and assets in the ordinary course of business. Although only a small fraction of the workforce will ever commit occupational fraud, myriad factors provide the pressures, opportunities, and rationalizations that motivate and enable perpetrators to carry out their fraud schemes. These circumstances create the conditions for global fraud losses to reach trillions of dollars annually.”

From “Occupational Fraud 2024: A Report to the Nations” published by the Association of Certified Fraud Examiners.

“Asset misappropriation cases involve an employee stealing or misusing the employing organization’s resources. This is by far the most common category of occupational fraud, occurring in 89% of the cases in our study. These cases also tend to cause the lowest median loss, at USD 120,000 per case. Nearly half the cases in our study (48%) involved some form of corruption. These cases caused a median loss of USD 200,000 per case. Financial statement frauds, in which the perpetrator intentionally caused a material misstatement or omission in the organization’s financial statements, were the least common category (5% of schemes) but also caused the greatest median loss (USD 766,000 per case).”

From “Occupational Fraud 2024: A Report to the Nations” published by the Association of Certified Fraud Examiners.

“While occupational frauds can be divided into three distinct categories, perpetrators do not always limit their schemes to just one category. As shown in Figure 4, 38% of the cases in our study involved two or more types of occupational fraud, with the most common overlap occurring between asset misappropriation and corruption (35% of cases). Interestingly, only 1% of cases in our study involved financial statement fraud alone. This indicates that when a person has been caught committing financial statement fraud, it is very likely they have been committing other types of fraud as well.”

From “Occupational Fraud 2024: A Report to the Nations” published by the Association of Certified Fraud Examiners.

“Early detection of frauds is critical to limiting the amount of damage they cause the victim organization. The median duration of the occupational frauds in our study was 12 months—meaning the typical perpetrator was able to commit their scheme for a full year before being detected. But as Figure 7 shows, the longer a fraud continues, the more it costs the victim. Frauds caught within the first six months had a median loss of USD 30,000, compared to USD 250,000 for frauds that lasted between two and three years. Cases that went undetected for five or more years caused a median loss of USD 875,000.”

From “Occupational Fraud 2024: A Report to the Nations” published by the Association of Certified Fraud Examiners.

“We calculated the velocity of the cases reported to us (i.e., the total loss divided by the number of months the scheme lasted) to measure the impact of di erent types of fraud over similar time periods. The overall velocity, or amount lost per month, of all cases was USD 9,900. Figure 9 shows that certain scheme types compound much more quickly than others, with financial statement fraud and corruption schemes having the greatest velocities. Similarly, cases involving collusion between two or more perpetrators and cases perpetrated by individuals at higher levels of authority also have higher velocities and inflict financial damage to the victim more quickly.”

From “Occupational Fraud 2024: A Report to the Nations” published by the Association of Certified Fraud Examiners.

“However, frauds at small companies (i.e., those with fewer than 100 employees) caused a median loss of USD 141,000, which was the second-largest loss among organizational size categories. Because small organizations tend to have smaller budgets and revenue, such a loss can impact these organizations more acutely compared to larger organizations.”

From “Occupational Fraud 2024: A Report to the Nations” published by the Association of Certified Fraud Examiners.

“As illustrated in Figure 40, frauds committed by individuals at the owner/executive level only represented 19% of cases but caused the highest median losses by far. Perpetrators at the owner/executive level caused a median loss of USD 500,000, which was more than eight times as much as staff-level employees (USD 60,000) and almost three times as much as mid-level managers (USD 184,000). Frauds carried out by employees and managers were much more common, representing 37% and 41% of the cases submitted, respectively.”

From “Occupational Fraud 2024: A Report to the Nations” published by the Association of Certified Fraud Examiners.

“As shown in Figure 50, more than half (54%) of the frauds in our study were carried out by multiple perpetrators colluding, rather than a single fraudster acting alone. Schemes committed by sole perpetrators also had the lowest median loss (USD 75,000), and frauds perpetrated by three or more perpetrators caused losses more than twice as high as those perpetrated by only two coconspirators. The higher losses associated with collusive schemes could be related to easier circumvention of controls, such as separation of duties, when multiple perpetrators work together.”

From “Occupational Fraud 2024: A Report to the Nations” published by the Association of Certified Fraud Examiners

“As shown in Figure 51, the vast majority of perpetrators in our study (87%) had never been either charged with or convicted of a fraud-related offense, meaning that traditional criminal background checks would not have prevented the frauds from occurring. Interestingly, 5% of cases involved perpetrators with a prior fraud conviction that either was not known to the victim organization at the time of hiring or did not prevent the organization from hiring them.”

From “Occupational Fraud 2024: A Report to the Nations” published by the Association of Certified Fraud Examiners.

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