Page 261 - ACFE Fraud Reports 2009_2020

source of tips Source of Tips
Not surprisingly, employees were the most common 49.2%
50%
source of fraud tips. However, customers, vendors, com-
petitors and acquaintances (i.e., non-company sources)
40%
provided at least 34% of fraud tips, which suggests that
fraud reporting policies and programs should be publi- 30%
cized not only to employees, but also to customers, ven- Percent of Tips
dors and other external stakeholders. 20% 17.8%

impact of Anonymous Reporting 10% 13.4% 12.1%
Mechanisms (hotlines) 3.7%
2.5% 1.8%
While tips have consistently been the most common way 0%
Acquaintance
to detect fraud, the impact of tips is, if anything, understat- Employee Customer Vendor
Owner
ed by the fact that so many organizations fail to implement Anonymous Shareholder/ Competitor Perpetrator's
fraud reporting systems. Such systems enable employees
to anonymously report fraud or misconduct by phone or Source of Tips
through a web-based portal. The ability to report fraud
6
anonymously is key because employees often fear making repeatedly been shown to be the most effective way to
reports due to the threat of retaliation from superiors or catch fraud. The better an organization is at collecting and
negative reactions from their peers. Also, most third-party responding to fraud tips, the better it should be at detect-
hotline systems offer programs to raise awareness about ing fraud and limiting losses.
how to report misconduct. Consequently, one would ex-
pect that the presence of a fraud hotline would enhance In 67% of the cases where there was an anonymous
fraud detection efforts and foster more tips. tip, that tip was reported through an organization’s fraud
hotline. This strongly suggests that hotlines are an effec-
This turns out to be true. As seen on page 18, the pres- tive way to encourage tips from employees who might oth-
ence of fraud hotlines correlated with an increase in the erwise not report misconduct. Perhaps most important, as
number of cases detected by a tip. In organizations that noted on page 43, organizations that had fraud hotlines suf-
had hotlines, 47% of frauds were detected by tips, while fered much smaller fraud losses than organizations without
in organizations without hotlines, only 34% of cases were hotlines. Those organizations also tended to detect frauds
detected by tips. This is important because tips have seven months earlier than their counterparts.

6 For simplicity’s sake, we will refer to all reporting mechanisms as hotlines in this study.

2010 RepoRt to the NAtioNs ON OccuPATIONAl FRAUD ANd AbuSE | 17