Bob is the Operations Manager of a mid-sized, family owned business. He has 20 years of experience in the industry and four years at his current company. He is well-educated, well-respected by his colleagues – and well on his way to stealing more than $100,000 from his employers.

According to the 2012 Report to the Nations on Occupational Fraud and Abuse, compiled and released by the Association of Certified Fraud Examiners (ACFE), workplace fraud cost companies an estimated $3.5 trillion each year – and the average perpetrator looks something like Bob.

Considering how common Bob is within the local workforce and how difficult it is to recoup fraudulent losses, the ACFE study is a reminder that organizations of all sizes and entity types should take a regular look at the strength of their internal controls.

The ACFE examined 1,388 cases of occupational fraud in more than 100 countries, and the average fraud lasted 18 months at a cost of $140,000. The number and severity of the reported cases has decreased slightly in recent years, but a closer look at the perpetrators shows just how common fraud can be. It cuts across all demographics:

  • 53.8% of perpetrators had at least an undergraduate degree, up from 45.3% in 2008
  • 54.7% were between the ages of 31 and 45
  • 41.6% held staff positions and 37.5% were managers
  • 41.5% had between one and five years of experience at the company
  • 22.0% worked in the accounting department and 17.4% worked in operations

Organizations that did not have formal controls in place lost an average of 45% more than victims with formal controls. In almost half of all cases, none of the losses were recovered. There is no way of knowing how many incidents go undetected; of the fraud cases that are detected, 43.3% are initially uncovered by a tip – the most common detection method – and most of the tips come from the perpetrators’ co-workers.

For more information, click here to request a free copy of the ACFE report or call (513) 241-8313 to contact a Barnes Dennig fraud investigator.

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