Summary of 2016 Report to the Nations on Occupational Fraud and Abuse
The report was issued by the Association of Certified Fraud Examiners (ACFE) in 2016 with the global fraud surveys over Europe, Asia, South America and North America.
1. The typical organization loses 5% of revenues each year to fraud. If applied to the 2015 estimated Gross World Product (GWP), this translates to a potential projected global fraud loss of nearly USD 3.7 trilllion (5% of $74 trillion GWP)
2. The median loss due to fraud was $150,000 in 2016 while 23% of the cases resulted in losses in excess of $1 million.
3. The median amount of time from when the fraud commenced until it was detected was 18 months.
4. The term "occupational fraud" encompasses three categories of fraud
a. Misappropriation of assets
- 84% of cases
- Least costly type of fraud at median loss of $125,000
b. Fraudulent financial reporting
- 10% of cases
- Most costly type of fraud with median loss of $975,000
- 35% of cases
- Median loss of $200,000
5. The longer a fraud lasts, the more financial damage is caused. Proactive detection measures (hotlines, management review process, internal audit and employee monitoring mechanisms) are vital in catching frauds early and limiting the losses.
6. The smallest organizations tend to suffer disproportionately large losses due to occupational fraud.
7. The banking and financial services, government and public administration, and manufacturing industries continue to have the greatest number of fraud cases. The mining, real estate, and oil and gas industries had the largest reported median losses from fraud.
8. Owners/executives only accounted for 19% of all cases, but they caused a higher median loss of $703,000.
9. It takes time and effort to recover the money stolen by perpetrators, and many organizations are never able to fully do so. 58% of the victim organizations did not recover any of their losses due to fraud. Only 12% had made a full recovery.
10. Most occupational fraudsters exhibit certain behavioral traits that can be warning signs of their crimes, such as living beyond their means or having unusually close associations with vendors or customers.