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 ACFE.com/benchmarking-report.