Page 197 - ACFE Fraud Reports 2009_2020

Detecting Fraud in Small Businesses

small businesses (those with less than 100 employees) are typically thought to have fewer or weaker controls
in place than their larger counterparts, primarily due to a lack of personnel or financial resources. The results
of our survey bear this out, as a lower percentage of frauds in small businesses were caught by internal con-
trols. additionally, internal audits and tips were cited as the detection method in fewer small business cases
than among all cases, while small business frauds were also more likely to be detected by accident. These find-
ings indicate that small organizations have room for improvement in their proactive fraud detection efforts.

Initial Detection of Frauds in Small Businesses 7

41.7% Small Businesses
Tip
46.2%
29.6% All Cases
By Accident
20.0%
Type of Detection Internal Controls 17.3%
10.7%
Internal Audit
19.4%

14.3% 23.3%
External Audit
9.1%
3.3%
Notified by Police
3.2%
0% 10% 20% 30% 40% 50%
Percent of Cases

7 The sum of percentages in this chart exceeds 100 percent because in some cases respondents identified more than one detection method.

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2008 Report to the Nation on occupational Fraud and abuse