Page 146 - ACFE Fraud Reports 2009_2020

Limiting Fraud Losses

We asked each respondent to provide information on the anti-fraud measures

that were in place in the victim organizations at the time the frauds occurred.
Our goal was to identify which mechanisms were most commonly used and
to measure each anti-fraud measure’s relative effectiveness.

Most Common Anti-Fraud
Measures
The most common anti-fraud measure among the victim
organizations in our study was the use of external audits,
which were utilized by 75% of the victim organizations.
Next most common was internal audits, at 59%. Fraud
training and fraud hotlines were both utilized by just un-
der half of the organizations we studied, while surprise au-
External audits dits were only reported in 29% of victim organizations.
were the
most common It is interesting to note the discrepancy between the frequency
anti-fraud of certain anti-fraud measures here and the data we gathered
measure used on detection of occupational fraud. For example, we found
by victim that the most common means of detecting fraud was through
organizations. tips (see pg. 28), yet as the following chart shows, hotlines
ranked fourth among anti-fraud measures in terms of use,
and were utilized by less than half of the organizations in our
We tested for five anti-fraud measures: study. Given the relative effectiveness of tips as a detection
method, we would hope to see more organizations utilizing
1) Did the victim have a fraud hotline or anonymous reporting mechanisms such as hotlines in order
anonymous reporting mechanism? to encourage and facilitate the reporting of illegal conduct.

2) Did the victim provide fraud awareness or ethics On the other hand, external audits were by far the most
training for employees and managers?
commonly reported anti-fraud measure, yet external audits
3) Did the victim have an internal audit or fraud ranked fifth in terms of detecting occupational fraud. Al-
examination department? though there are a number of factors that determine what
kinds of anti-fraud measures will be used by an organiza-
4) Did the victim perform surprise audits on a tion (external audits, for instance, are legally required for
regular basis? certain types of organizations), there nevertheless seems
to be a certain level of disconnect between the anti-fraud
5) Was the victim audited by external auditors? measures organizations employ and the effectiveness of
those measures in detecting occupational fraud .
11

11 The effectiveness of these measures in deterring or preventing occupational fraud is certainly a key factor in determining whether they should be
employed, but the deterrent capability of these mechanisms is outside the scope of our inquiry.

ACFE Report to the Nation on Occupational Fraud & Abuse