In April 2018, the ACFE released the 2018 Report to the Nations, which provided a global analysis of the costs and effects of occupational fraud (i.e., fraud committed against the organization by its own officers, directors, or employees). The report highlighted the tremendous impact occupational fraud has on organizations throughout the world.
In a new sub-report, we now focus more closely on how occupational fraud impacts the government sector. This study is based on the cases of occupational fraud in the government that were reported in our 2017 Global Fraud Survey. Collectively, these cases, which accounted for 16% of all cases in our global study, caused a median loss of USD 118,000 and lasted a median 18 months before they were detected.
Here are few of the key findings from the report:
Nearly half of the cases in government agencies involved some form of corruption (bribery, kickbacks, illegal gratuities or conflicts of interest). Corruption was more than twice as common as the most frequent types of asset misappropriation, such as theft of noncash assets and billing schemes.
The most common detection method was by a tip (45% of cases), with more than half of these tips coming from employees of the victim government agency.
Occupational fraud losses are strongly correlated with the fraudster’s level of authority. The median loss in frauds committed by those at the executive level of government agencies was USD 702,000, which is significantly higher than losses caused by managers (USD 157,000) and employees (USD 50,000).
Collusion has a significant impact on the amount of money fraudsters are able to steal. The median loss in cases perpetrated by two or more individuals was seven times as much as the median loss caused by perpetrators who acted alone.
Most victim government agencies are unable to recover their losses after a fraud has occurred. 59% of government victims in the study never recovered any losses.
Find more trends and analysis from the government sector, as well as download other useful infographics at ACFE.com/RTTNresources.