How Do Performance Metrics Impact the Amount of Fraud Losses Recovered?


Andi McNeal, CFE, CPA
ACFE Research Director

It is often said: what gets measured, gets done. In the newly released In-House Fraud Investigation Teams: 2017 Benchmarking Report, the ACFE surveyed its members regarding the performance, structure and operations of their organizations’ internal fraud investigation teams.

As part of the survey, we asked respondents which performance metrics, if any, are used to evaluate their investigation teams, and 39% reported that no performance metrics are used. The figure below (Fig. 22) shows the performance metrics used by the 61% of teams in our survey that do formally measure performance. For those teams, the most commonly used metric is the number of cases closed year-over-year (58%), followed by the amount of losses recovered (50%).


To see how these various performance metrics affected organizations’ recovery of fraud losses, we then looked at the average percentage of fraud losses recovered based on the performance metrics that organizations had in place.

Not surprisingly, the two metrics associated with the highest average recovery rates are the amount of losses recovered and the percentage of estimated losses to actual losses. An interesting trend in this data is that performance metrics that focused on the quality of the outcome of investigations (e.g., recovery of actual losses or change in expected losses, cases resulting legal action, compliance with investigation standards, and amount of losses diverted) tend to correspond with greater loss recovery than performance metrics based on the quantity of cases completed (e.g., number of days to close cases and number of cases closed year-over-year).


In Fig. 22, the number of cases closed year-over-year was the most common performance metric, but, as shown in Figure 23, organizations using this metric averaged one of the lowest percentage of losses recovered. Another significant finding is the relatively low percentage of fraud losses recovered (25%) by organizations that do not use any performance metrics to measure their investigation team’s effectiveness. Based on this analysis, organizations might consider revising some of their performance metrics or adding metrics to improve their recovery of fraud losses.

You can find these and other survey results in the full report, available for free to all ACFE members and for only $129 for non-members, at

How Fraud Examiners Can Use and How Fraudsters Can Abuse Artificial Intelligence


Amber Mac, TV/Radio Host, Internet of Things Expert at AmberMac Media, and keynote speaker at the upcoming 2017 ACFE Fraud Conference Canada in Toronto, October 29-November 1

What do you think is the No. 1 security risk that advancing technology poses?

I think the Internet of Things (IoT) attack surface is the biggest technology threat today. As Gartner points out, there will be 20 billion devices connected to the internet by 2020. However, unlike smartphones and computers, we're seeing thousands of newly released IoT gadgets every day from a myriad of suppliers. This means that security precautions are often bypassed in order to get to market more quickly. (Hear Amber discuss this even more in depth in her podcast interview at

How do you think fraud examiners could potentially use (and conversely fraudsters abuse) AI?

When we talk about artificial intelligence (AI), fraud examiners are more regularly using this technology to detect fraud (without even knowing it). For example, machine learning software (one application of AI) can now quickly and effectively determine accounting abnormalities. However, fraud attackers are also using early stage AI to commit fraud. If fact, most worrisome to me is video fraud. Many research institutions are already experimenting with algorithms that program a video to make a politician or business leader appear to say things that they did not. One can only imagine the issues with this as the technology gets into the wrong hands.

What are you most hoping attendees of the conference will take away from your presentation?

I really want attendees to leave my presentation with a much better understanding of the future of both the Internet of Things and artificial intelligence. It’s critical to recognize what’s happening in the market today and where things are heading in the next five to 10 years, so fraud examiners can properly prepare for the inevitable risks.

You are on the front lines of the latest and greatest technology out there, but what is one thing you still hold on to that is manual or traditional?

Strangely enough, I still write my research notes on a piece of paper or in a notebook. For me, it’s not that I don’t recognize the power of digital tools to simplify this process, but I use this practice as a memory tactic. It’s only upon writing with pen to paper that I can better recall facts and stats.

You can read more about Amber and register for the 2017 ACFE Fraud Conference Canada at Be sure to register by September 29 to save CAD 100!

ACFE Regent: Be Aware of Examination Tunnel Vision

Below is an excerpt from the latest article in Fraud Magazine, "The challenge of the chase: ACFE Board of Regents offer beneficial advice". All five elected regents sat down with Fraud Magazine at the ACFE Global Fraud Conference in June to discuss cyberfraud, technology, global partnerships and lessons learned. Here is one reflection from ACFE Regent Vidya Rajarao, CFE, CA and partner at Grant Thornton India.

Fraud Magazine (FM): One thing we don’t like to talk about are the things that didn’t go right. But we learn from those mistakes more than we learn from our successes. So, would you be willing to share some of the steps you made in the last year or past years that have really helped you in a particular case of how a fraud was working?

Vidya Rajarao: I think not understanding the scope of the problem is the biggest one. Initially you just have tunnel vision. You think it’s a small problem. You don’t realize it’s the tip of the iceberg. And what you’re attacking is just the tip.

FM: So, have you learned that there are no small problems? That you must assume this is the tip of the iceberg?

Rajarao: The challenge, as a practitioner, is I must assume this is not the tip of the iceberg, but then when you talk to clients they don’t want to hear that the problem is an iceberg. They want to contain it, and they believe that it’s just the tip. They want to believe it’s isolated: one rogue employee, one division, that it’s not a companywide problem. So, you need to balance the two. When you’re doing your work you still need be mindful that even though your current mandate is to evaluate the tip of the iceberg you’d be remiss in not telling your client once you have finished there is a larger problem behind the small issue, even though the client doesn’t want to hear that message.

FM: Can you think of an instance when you didn’t do that?

Rajarao: Yes, I can think of instances where I’ve not done that. Either because the client doesn’t want to listen or ... you’re just chasing the next fraud case. You’ve got five other cases, your teams are strained, so you just don’t explain the bigger picture. Five months later, you realize the small fraud is emblematic of a larger organizational issue either because of lack of controls, lack of training or they’ve done an acquisition and haven’t devoted time to transitioning everybody into one level of corporate governance. So, there’s only so much you can handle, and you’re always chasing.

Read the full interview in the latest issue of Fraud Magazine.

Turnabout's Unfair Play: The CFE Gets Defrauded


Annette Simmons-Brown, CFE
Former Senior Paralegal, Hennepin County Attorney's Office

One would think that a CFE with over nine years of experience assisting in the prosecution of white-collar crimes would be somewhat Zen about being the victim of a fraud attempt herself. One would think that, and one would be wrong.

After three days of driving from Minneapolis, Minnesota, to our new hometown of Tallahassee, Florida, our real estate agent, my husband and I stood in the kitchen of the house we had under contract. This house showed really well, had great curb appeal and we were scheduled to buy it 21 hours later.

This house that we loved and were planning to make our new home was a complete and total pigsty. There were piles of personal junk in the corners of every room and the garage. Lateral blinds hung from window frames and there was a newly-torn-out section of screen in the back porch that the property inspection had not noted. The bathrooms had spots galore and the self-cleaning oven looked radioactive.

The three of us stood there after our walk-through, speechless. It was clear that the sellers, having already moved into their new home, had abandoned any pretense of getting the property ready for closing. It was equally clear there was no way the house would be move-in ready within 21 hours.

Then my husband remarked, “Wait a minute.” He stared at the refrigerator for a few seconds. “This isn’t the refrigerator that was in the listing sheets.”

We pulled up the online listing, and sure enough, the gorgeous and huge stainless steel refrigerator that was featured prominently in the listing photos was nowhere in this kitchen. Instead there was an older, smaller, inferior stainless steel fridge in its place.

We agreed that we would not close on the property given its condition and the sellers’ bait-and-switch with an inferior major appliance. Because my husband and I were so punch-drunk from selling our own house and moving across the country, we told our agent that we would keep the purchase contract alive if the sellers dropped the price by $5,000. Our agent called the listing agent and left an angry voicemail detailing the terrible conditions of the house and our revised offer. We went back to our hotel room in the driving rain and waited.

One would think that the listing agent and his broker would be grateful for our willingness to go through with the purchase at all given how he and the sellers tried to defraud us. One would think that, and one would be wrong.

Read the rest of Annette's story on in The Fraud Examiner newsletter's archives.

How is Your Company's Fraud Health? Test It and Find Out.


Mandy Moody, CFE
ACFE Content Manager

As we prepare for International Fraud Awareness Week, November 12-18, we make sure to always share one of our tried and true, free resources: the ACFE Fraud Prevention Check-Up. The complimentary tool will test your company’s fraud health with a detailed checklist and video.

Why you should take the Fraud Prevention Check-Up:

  • It is an easy-to-use way to identify gaps in your company's fraud prevention processes. By identifying risks early, you have a chance to fix the problem before losing money and becoming a victim of fraud.
  • It is a great opportunity to establish a relationship with a Certified Fraud Examiner (CFE) whom you can call when fraud questions arise. Since the risk of fraud can be reduced but is rarely eliminated, it is likely your company will experience fraud in future and will need a CFE's assistance.
  • Strong fraud prevention processes bolster the confidence investors, regulators, audit committee members and the general public have in the integrity of your company's reports, which will help you attract and retain capital.

Make it a priority to get your ACFE Fraud Prevention Check-Up and share it with your colleagues and managers during this year's Fraud Week. Also, check out more free resources like this at