‘Tis the Season – for Fraud?

GUEST BLOGGER

Scott Patterson
ACFE Senior Public Relations Specialist

We receive questions from the media about all sorts of fraud-related things. Business writers and reporters often ask about trends and the latest statistics on fraud – sometimes on specific issues like mortgage fraud, identity theft, healthcare fraud and others. Sometimes the need is for more general statistics, like those in the Report to the Nations on Occupational Fraud and Abuse.

It stands to reason, then, that during a certain time of year – such as the holidays, in this case – people would be interested to know whether fraud increases, decreases, or stays the same. What impact, if any, does holiday shopping and everything related to the season have on fraud occurrence?

That’s a question to which we didn’t have an answer. And neither did anyone else, so far as we could find. So we turned to our community of experts – Certified Fraud Examiners (CFE) – and we asked them.

On average, respondents told us that they believe fraud losses increase during the holiday shopping season by nearly 20 percent (compared to the rest of the year). And they think the single biggest contributing factor is increased financial pressure on perpetrators (61 percent), followed by an increased opportunity to commit fraud (24 percent) and increased rationalization for fraud (10 percent). These three factors are represented in Dr. Donald R. Cressey’s “Fraud Triangle” and their presence is considered necessary in order for fraud to occur.

Employee embezzlement/theft is the fraud scheme most likely to increase during the holidays, according to 56 percent of survey respondents – while half of them also reported that fraud by unrelated third parties, such as identity theft and con schemes, will increase.

Another area of concern in the findings: Despite seeing an apparent increase in fraud during the holidays, the majority of our survey respondents reported that their organization does not increase efforts to prevent or detect fraud during this time.

These survey results reinforce the connection between financial pressures and the risk of fraud. The holidays can be wonderful in many ways, yet they can also represent added stresses and pressure that may influence decision-making. During a tough economy, gift shopping might bust the budget. Holiday bonuses may be trimmed down or nonexistent. Job responsibilities and hours might be increased with fewer employees to do the work. These factors could lead to more fraud – which suggests that a certain degree of vigilance by business owners and other organizational leaders is appropriate.

You can read more about the study on Accounting Today. Also, check out the ACFE's Fraud and the Holidays infographic.

I’d like to thank the nearly 900 CFEs who participated in the survey, and also wish everyone a fraud-free holiday season.

Fraud by the Numbers: The 2012 Report to the Nations

GUEST BLOGGER

John Warren, J.D., CFE
Vice President and General Counsel

As most readers are probably aware, every two years the ACFE publishes a new edition of the Report to the Nations, a global study on occupational fraud. This is one of our most important initiatives and one of the things we are most proud of as an organization. The Report provides information on the costs, methods, victims and perpetrators of occupational fraud – information that simply cannot be obtained anywhere else in the world.

We are now putting the finishing touches on the 2012 Report, which is scheduled to be released to the public May 8.  I have personally been involved in the production of every edition of the Report since 1996, and I can confidently say that the 2012 Report is the best and most complete study we have ever done. It contains a tremendous amount of information about how frauds are detected, the effectiveness of various controls, the characteristics of fraud offenders, the impact of fraud in various regions of the world, and more. The Report should be required reading for any anti-fraud professional and we hope it is something our members can use to educate their own clients and organizations about the risk they face from occupational fraud.

Our staff puts a tremendous amount of work into making sure the Report contains accurate, insightful information that will be useful in fighting fraud. The ACFE research department spends months reading every case we receive, organizing the data, analyzing it and compiling it into the final Report. And our graphic design team does a tremendous job taking the thousands of pieces of data we have assembled and organizing it so that key facts are accessible and easy to read. 

But the ACFE staff is not the only group responsible for the information you see in the Report to the Nations.  The data we compile and present to you is only available because of the wonderful contribution of Certified Fraud Examiners (CFEs) from around the world who took the time and effort to participate in our survey and provide information about specific fraud cases they had investigated.  In the 2012 study we received nearly 1,400 cases of occupational fraud, which gives us a tremendous data set with which to work and allows us to produce what is widely recognized as the world’s most comprehensive study on occupational fraud. It is a testament to the dedication of our members that they are willing to give their time and share this information not for any personal gain or notoriety, but simply to contribute to our growing understanding of occupational fraud and to support the anti-fraud community.

If you have been a member of the ACFE for any length of time, you have no doubt heard our founder and Chairman, Dr. Joseph T. Wells, CFE, CPA, and our President and CEO, James Ratley, CFE, talk about the ACFE’s focus on being the best association in the world. We work to achieve that goal through the outstanding efforts of our highly trained and dedicated staff and our leadership’s constant commitment to excellence. But the quality of our organization extends far beyond ACFE headquarters; we also have the best members in the world, and the Report to the Nations is evidence of that fact. As you read the 2012 Report in the coming weeks, I have no doubt you will find information that is informative and helps you in your career. Please keep in mind the contributions of all the committed CFEs who made this Report possible and who support the ACFE, their fellow anti-fraud professionals and the communities and organizations in which they work and live every day. 

The 2012 Report to the Nations on Occupational Fraud and Abuse is available in electronic form on ACFE.com.