Page 237 - ACFE Fraud Reports 2009_2020

in addition, there is evidence that employment back-
Non-Cash
ground checks are ineffective at identifying potential
Department # of Cases %
fraudsters even when those persons have had previous
Executive / Upper Management 27 22.1%
employment-related issues involving fraud. in over
Operations 23 18.9%
half of the cases we reviewed where the employee had
Sales 17 13.9%
been punished or terminated by a previous employer
Warehousing / Inventory 17 13.9%
for a fraud-related offense, the victim organization
Accounting 13 10.7%
had checked the individual’s employment history as
Information Technology 7 5.7%
part of the hiring process. assuming the majority
Manufacturing and Production 6 4.9%
of these organizations did not knowingly hire past
Research and Development 4 3.3%
fraudsters, it seems likely that the past misconduct
Customer Service 3 2.5%
did not turn up on these background checks.
Purchasing 2 1.6%
Finance 1 0.8%
While it is impossible to say why the employment
Internal Audit 1 0.8%
background checks failed in these circumstances, we
Legal 1 0.8%
do know that many employers are reluctant to share
negative information about past employees for fear
Background Checks and
Perpetrator’s Criminal and Types of Background Checks Conducted 22
Employment History 60%
50.7%
background checks are frequently used as part of 50%
the hiring process in order to ensure the reliability 39.4%
of an organization’s workforce. More than half of 40%
the victim organizations in our study conducted a Percent of Cases 30%
background check on the employment history of 22.5%
the fraudster, and 40% ran a criminal background 20%
check on the employee prior to hiring.
10%
unfortunately the effectiveness of background 0%
Employment Criminal Credit
checks in preventing fraud is limited. as we found History Checks Checks
in our previous studies, the vast majority of em- Type of Background Check
ployees who commit occupational fraud are first-
22 The sum of percentages in this chart exceeds 100 percent because some
time offenders. in 87% of the cases in our survey, organizations conducted more than one type of background check.
the perpetrator had never been charged with or of potential legal liability. in other cases, organiza-
convicted of a fraud-related offense prior to the dis- tions simply ask a new hire for references and fail to
covery of his or her scheme. additionally, 83% of conduct an independent check on their own. This
the fraudsters had never previously been punished is an ineffective method of checking an applicant’s
or terminated by an employer for fraud or abuse.
employment background and is unlikely to turn
up any evidence of past misconduct. While we do

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2008 Report to the Nation on occupational Fraud and abuse