The Association of Certified Fraud Examiners’ (ACFE) 2012 Report to the Nations reports that the typical organization loses 5% of its revenues to fraud each year. Based on participants’ responses to the survey, the ACFE estimates the median loss from occupational fraud at $140,000, with more than 20 percent of incidents resulting in at least $1 million in losses. At least! Even worse, more than half of those enterprises were unable to recover the losses.
Your organization is most likely to be effected by fraud if you’re in the banking and financial services sector, in government and public administration, or are a manufacturing firm. Smaller businesses are hit especially hard because they usually have less money to devote to reporting and deterring waste and abuse.
Asset misappropriation was the most common occupational fraud, making up 87 percent of the cases reported, with a median loss of $120,000. More than two-thirds of frauds in the study were committed by employees in accounting, operations, sales, customer service and purchasing. Executives and upper management were also among the top fraudsters.
You can’t afford unnecessary hits to your bottom line. To mitigate the risk of revenue loss from fraud, the ACFE recommends that “management should continually assess the organization’s specific fraud risks and evaluate its fraud prevention programs in light of those risks.”