Coming Soon: New Report on Measuring In-House Fraud Investigation Teams

FROM THE RESOURCE GUIDE

Andi McNeal, CFE, CPA
ACFE Director of Research

Proving ROI on anti-fraud initiatives can be incredibly difficult. Measuring the amount of fraud that’s been prevented, determining whether investigations are being performed as efficiently and cost-effectively as possible, evaluating whether frauds are being detected and responded to quickly and thoroughly enough — we frequently hear our members express how challenging these types of assessments are to perform. And the effort of explaining these issues to management, who is pressing for formal metrics, can make this area even more challenging in many organizations.

But anti-fraud teams need to be held accountable, just like every other team within the organization. One of the best ways for any team to measure and report its effectiveness is to benchmark its structure and performance against industry norms. Organizations often have historical data about their own investigation teams, but lack access to similar data from other organizations that can be used for benchmarking purposes. In 2015, we released our first benchmarking report for fraud investigation teams, and the response was incredibly positive. We knew there was a need for this type of data, but we heard from so many people — both members and non-members, from all over the world, from numerous industries, from all over the organizational chart — that this was the information they had been waiting for. Two years later, we are excited to release our next edition of this members-only resource, which has been expanded from the first to include additional benchmarking angles. 

Some insights from the upcoming In-House Fraud Investigation Teams: 2017 Benchmarking Report include:

If you want to learn more about how other fraud investigation teams are structured and how your investigation team measures up, you can see the full benchmarking report next month on ACFE.com. We hope this report helps support your team’s effectiveness and highlights its success to your organization’s decision-makers. And if there are benchmarking metrics or questions you’d like to see covered in future ACFE benchmarking research, send your ideas to Research@ACFE.com.

Find out more about the ACFE's latest resources, products and events in the most recent Resource Guide.

Cornell University Students Develop a Fraud Deterrence Policy Evaluation Checklist

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John E. “Jack” Little, CFE, CPA, and Jenny Mak

Organizations of all sizes should regularly evaluate the systems they have in place to deter fraud, abuse and misconduct. This involves an organized review of current policies, procedures and controls that safeguard and protect an organization’s assets from unnecessary risk.

As part of a project in the spring 2015 Fraud Examination class in the Dyson School of Applied Economics and Management at Cornell University, a checklist was developed to aid in the evaluation of such systems. The class focused on understanding different types of fraud through textbook readings, guest speakers and local fraud cases. We began creating the checklist by reviewing a white paper authored by a group of forensic investigators from KPMG titled Fraud Risk Management, Developing a Strategy for Prevention, Detection and Response. The document provides an overview of the fundamentals involved in deterring the risk of fraud and abuse within organizations. 

Applying key concepts from this resource, the class converted it into a checklist that can be used to gather information, document controls and procedures, and evaluate existing policies. The checklist focuses on three key areas of control: prevention, detection and response. Additionally, it indicates the specific KPMG document page number from which the question was developed for ease of guidance and reference. The checklist works in a way such that opportunities for improvement in the system of internal controls, policies and procedures become apparent when the questions are answered and the comments written up.

Once this checklist was designed, the student group moved to apply it to the systems used by Cornell University. Students first completed the checklist with information that was readily available online. Later, students met with the University Audit Office and Cornell Human Resources, both of whom provided additional information via interviews and discussions. After the meetings, the student circled back around to complete any gaps in the checklist. A copy of the completed checklist can be found here.

At the conclusion of our work, the class came to believe that the systems and controls in place at Cornell University were adequate. However, we had a number of suggestions for improvements to those systems and controls to strengthen the processes. Those recommendations were:

  1. Consider having a more formal fraud risk assessment conducted by independent outside consultants.
  2. Expand its use of data analytics within the internal audit function of the University Audit Office.
  3. To continue improvement in campus-wide training programs for fraud deterrence.
  4. To implement a universal acknowledgment by employees documenting their familiarity with Cornell’s policies and procedures for the deterrence of fraud, abuse and misconduct.

In a closing meeting with University Auditor Glen Mueller and Audit Director Mark Perry, the student group presented the completed checklist and recommendations.  Since the final meeting, the University Audit Office has made a shift towards continuous monitoring through the use of data analytics and is actively working towards implementing the use of ACL software to track fraud. 

It is our hope that by sharing this checklist, there will be a benefit for both practitioners and management of organizations who must consider a review of their systems of fraud deterrence.

John E. “Jack” Little, CFE, CPA, is the senior lecturer of accounting at the Dyson School of Applied Economics and Management at Cornell University in Ithaca, New York, and a local practitioner. His email address is: jack.little@cornell.edu.

Jenny Mak is senior in the Dyson School of Applied Economics and Management at Cornell University and will graduate with a Bachelor’s of Science with concentrations in accounting and finance in December.  Upon graduation she will begin her career in the profession and will sit for the CPA Exam. Her email address is: jm783@cornell.edu.

The ACFE’s Top 3 New Year’s Resolutions for 2015

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Courtney Pedersen
ACFE Communications Coordinator

I have yet to decide my 2015 New Year’s resolutions. And well into the New Year, I am still drawing a blank. In 2012, I resolved to have a “real” job six months after college graduation (check). In 2013, I resolved to buy a home in the crazy Austin, Texas, market (check). And, in 2014, I resolved to live healthier so I joined a gym (check. Well, I joined a gym; whether or not I am active in said gym is not worthy of discussion). Thankfully, as always, the ACFE is prepared this New Year to do more for you in 2015 than ever before.

  1. Offer you even more online resources
    With online self-studies, a fraud resource library, Fraud-Magazine.com and more, the ACFE provides a variety of online resources to give you access to cutting-edge anti-fraud knowledge, whenever and wherever you need it. In 2015, the ACFE will expand these offerings, including YouTube videos that are shareable with colleagues and clients, career videos, podcasts and more. 

  2. Redesign Fraud-Magazine.com
    Fraud-Magazine.com will become a responsive site in 2015 and will boast a fresh, new design. This means that whether you are on a computer, tablet or mobile device, your Fraud-Magazine.com experience will be seamless and user-friendly. The site will also offer more online content and make reading the latest in fraud prevention and detection even easier.

  3. Host the largest anti-fraud conference ever, and offer more live events and seminars
    The 2015 ACFE Global Fraud Conference is on schedule to be the world’s largest anti-fraud conference to date with more than 3,000 expected to attend in Baltimore. Not only are we concentrating on making this experience memorable and informative, we have also been concentrating on growing our international events. Last year the ACFE held 12 international events, compared to eight events in 2013. This year, we plan to continue to offer international members the opportunity to network and learn in a seminar environment in cities like Dubai, United Arad Emirates, San Juan, Puerto Rico, and more.

The ACFE’s New Year’s resolutions will help all members this year in the office and abroad. Whether you have decided on your resolution or are still pondering like I am, just remember that the ACFE is committed to doing more for you in 2015.

How Will You Observe Fraud Week?

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Scott Patterson, CFE
ACFE Senior Media Relations Specialist

This year’s International Fraud Awareness Week (Fraud Week) is November 16-22, 2014, and I’m excited to see that Official Supporters are already signing up and planning their activities to help raise awareness of fraud. While preventing and detecting fraud is a year-round endeavor, Fraud Week provides a unique chance for organizations to unite in bringing this global problem to the fore of the public consciousness.

Why is Fraud Week so important right now? According to our 2014 Report to the Nations on Occupational Fraud and Abuse, organizations around the world lose an estimated 5 percent of their annual revenues to fraud. When applied to the 2013 Gross World Product, this translates to a staggering potential projected fraud loss of nearly $3.7 trillion.

Here are just a few other important facts that every business leader should know:

  • A single instance of fraud can be devastating. The median loss per fraud case in the ACFE study was $145,000, and more than a fifth of cases involved losses of at least $1 million.
  • The median duration — the amount of time from when a fraud commences until it is detected — for a fraud case is 18 months.
  • Tips are consistently the most common fraud detection method. Organizations with hotlines in place detected frauds 50% more quickly, and experienced frauds that were 41% less costly, than organizations without hotlines.
  • The smallest organizations tend to suffer disproportionately large losses. Additionally, the specific fraud risks faced by small businesses differ from those faced by larger organizations, with certain categories of fraud being much more prominent at small entities than at their larger counterparts.

The ACFE founded Fraud Week in 2000 to help shine a spotlight on the global problem. The grassroots campaign encourages organizations of all sizes and industries to host fraud awareness training for employees, conduct employee surveys to assess levels of fraud preparedness, post articles on company websites, newsletters and social media, and team with local news sources to promote fraud prevention and detection. 

You can learn more about it at FraudWeek.com, and we hope while you’re there you sign up your organization as an Official Supporter (at no cost), and then check the site often, as we will be adding new resources (including a printable handout of fraud tips and a downloadable infographic) to help raise awareness. Currently, you will find white papers, PowerPoint presentations, podcasts, videos and other helpful items available for Official Supporters to access online.

It is great to have one week out of the year to put fraud prevention in the spotlight. Fraud Week is right around the corner. What do you have planned to help raise awareness?

5 Ways to Stay Up to Date on Anti-Fraud News and Resources

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Ross Pry, CFE
ACFE Membership Director

In the almost seven years that I have been with the ACFE I have enjoyed a lot of “firsts.” I have gotten married, bought a house and earlier this month celebrated my daughter’s first birthday. Through her first year of life, I’ve been fortunate enough to see what pure joy looks like, and it was on full display as she devoured her birthday cake. With icing covering her hands, face and even the wispy hairs on the back of her head I was reminded of how much fun it is to experience something new.

I recently became the Director of Membership and am excited to be back in the department where I “first” got my start. We strive to provide members with great benefits and, as a staff, we are always looking to improve the member experience. With our members in mind, we have recently created the following new benefits:

  • Free webinars: This past year, we hosted seven free hour-long webinars for members to earn CPE credit. You can listen to the archives here. We have also recently launched free career-related webinars through the ACFE Career Center.
  • Free white papers: Industry-leading companies provide us with white papers that cover a variety of topics, including industry-specific trends, case studies on famous frauds and new technology to help in the fight against fraud. Check the Fraud Magazine website regularly updated white papers.
  • Podcasts: The ACFE just launched Fraud Talk, interviews with the industry’s leading experts addressing fraud issues, providing insight on case studies and new tools to aid in the detection and prevention of fraud. You can listen to the podcast online, or download it as an MP3 file. Bookmark this page and check back monthly for updated content. 
  • Resource library: For a centralized location of ACFE resources, click here for videos, publications, reports, sample documents and tools. The ACFE also publishes reports like the 2012 Report to the Nations and the Compensation Guide.
  • Training materials: We recently created an employee training program for CFEs to teach about common types of fraud, the warning signs of fraud and what to do if employees suspect fraud. Fraud’s Hidden Cost to You and Your Organization is a downloadable training video, workbook and slide set to help educate employees about fraud.

We look forward to continuing to serve and support our members with their careers, and as the ACFE continues to grow so does our focus and commitment to members.