Page 315 - ACFE Fraud Reports 2009_2020

Red Flags Based on perpetrator’s position
The behavioral indicators that a fraud perpetrator displays can vary depending on a number of factors. The following
chart shows the distribution of red flags based on the perpetrator’s level of authority. Among employee-level fraudsters,
the most common behavioral red flag was financial difficulties, which was present in nearly half of all employee fraud
cases. Because employee-level fraudsters generally have lower incomes than managers or owners/executives, we would
expect their motivation for committing fraud to more often be based on an immediate, pressing financial need, which
explains why this red flag shows up so often. While financial difficulty was still frequently cited in cases involving manag-
ers and owners/executives, it occurred much less often. Conversely, owners/executives and managers were much more
likely than employees to display control issues, to have unusually close associations with vendors or customers or to
exhibit a “wheeler-dealer” attitude. Each of these red flags tends to reflect the authority level of owners/executives and
managers, who are in a better position than employees to influence organizational decision-making, arrange deals with
outside parties and exert their control over the direction or tone of the organization.

behavioral Red Flags of Perpetrators based on Position 30

40.7%
Living beyond means 43.8% Employee
48.3%
47.6%
Financial difficulties 30.7%
26.1% Manager
15.2%
Control issues, unwillingness to share duties 25.8%
33.0%
Owner/Executive
Unusually close association with vendor/customer 12.1% 29.8%
24.9%
10.7%
Wheeler-dealer attitude 21.0%
35.2%
19.3%
Divorce/family problems 16.4%
16.5%
9.8% 16.5%
Irritability, suspiciousness or defensiveness
16.9%
Behavioral Red Flag Past employment-related problems 7.7% 10.7%
12.1%
Addiction problems
12.7%
11.6%
Refusal to take vacations
10.0%
11.1%
7.6%
8.4%
Complained about inadequate pay 6.8% 9.8%
7.3%
4.8%
Excessive pressure from within organization 9.9%
8.4%
6.3%
Past legal problems 5.9%
7.7%
6.6%
Instability in life circumstances 4.3%
5.7%
5.8%
Excessive family/peer pressure for success 4.3%
5.7%
2.6%
Complained about lack of authority 6.7%
2.7%
0% 10% 20% 30% 40% 50%
Percent of Cases
30 The sum of percentages in this chart exceeds 100% because in many cases perpetrators displayed more than one behavioral red flag.
2010 RepoRt to the NAtioNs ON OccuPATIONAl FRAUD ANd AbuSE | 71