A recent survey and report from the Association of Certified Fraud Examiners focused on fraud occurring at the workplace. The study provided recommendations on detecting workplace fraud and found that employee misconduct costs companies an estimated 5 percent of revenue annually.
The ACFE surveyed over 1,300 certified fraud examiners that had investigated at least one incidence of workplace fraud in the previous two years and published their findings in the “Report to the Nations on Occupational Fraud and Abuse” report. From the survey results the ACFE found that the median loss amount from cases of fraud in the workplace was $140,000 while more than twenty percent of victimized companies realized losses of at least $1 million. It was found that fraud conducted by managers or executives can go undetected for as long as two years, whereas fraud from lower-ranking employees can typically only be kept undetected for one year or less.
The study also listed the common ways companies are able to recognize workplace fraud. The most common way is for companies to set up an employee hotline for reporting fraud or abuse. Management reviews and internal audits are the second and third most common ways companies are able to first detect fraud, but external audits were only able to first detect workplace fraud in 3 percent of cases. Other suggestions on how to detect workplace fraud from the ACFE include requiring employees to take vacations and to incorporate surprise audits. Many cases of detecting internal or workplace fraud occur when the employee is on vacation and someone was filling in for their position. Additionally, the ACFE found that surprise audits can cut the time it takes to detect fraud by 58 percent.
For more information: How to Prevent Workplace Fraud