Page 316 - ACFE Fraud Reports 2009_2020

perpetrators

Red Flags Based on scheme type
We also broke down the distribution of red flags based on the type of fraud. Different forms of occupational fraud result
from different factors and circumstances, which we would expect to show up in the fraudsters’ behavior. As the chart
below illustrates, individuals who engaged in financial statement frauds were much more likely than other perpetrators
to exhibit control issues or to be under excessive pressure to perform within their organization. Meanwhile, living beyond
one’s means and experiencing financial difficulties were not as common among financial statement fraudsters as oth-
ers. This makes sense, because while asset misappropriations and corruption schemes are almost always committed to
enrich the fraudster, in many financial statement schemes, other factors — such as meeting earnings forecasts or hitting
budget targets — may be as much of a motivator as personal financial gain. An unusually close association with a vendor
or customer was noted as a red flag in 45% of corruption cases, which is not surprising given that most corruption frauds
involve bribery or some kind of illicit benefit. A “wheeler-dealer” attitude was also more common in corruption cases than
in other forms of fraud, and 42% of all corruption perpetrators were identified as living beyond their means. Among those
who misappropriated assets, living beyond one’s means and financial difficulties were the two most common red flags.

behavioral Red Flags of Perpetrators based on Scheme Type 31

22.7%
Living beyond means 42.0% Financial Statement Fraud
44.8%
24.0%
Financial difficulties 25.2%
39.3% Corruption
33.3%
Control issues, unwillingness to share duties 23.7%
22.2% Asset Misappropriation
20.0%
Unusually close association with vendor/customer 45.6%
19.3%
26.7%
Wheeler-dealer attitude 28.0%
18.5%
8.0%
Divorce/family problems 11.3%
19.0%
18.7%
Irritability, suspiciousness or defensiveness
13.9%
Behavioral Red Flag Past employment-related problems 7.4% 10.7% 14.7%
14.3%
9.3%
Addiction problems
12.9%
Refusal to take vacations
8.0%
10.7%
10.0%
9.1%
6.7%
Complained about inadequate pay
8.3%
8.6%
21.3%
Excessive pressure from within organization 11.1%
6.4%
8.0%
Past legal problems 5.9%
6.4%
2.7%
Instability in life circumstances 5.0%
5.9%
9.3%
Excessive family/peer pressure for success 6.5%
5.4%
4.0%
Complained about lack of authority 5.6%
4.7%
0% 10% 20% 30% 40% 50%
Percent of Cases
31 The sum of percentages in this chart exceeds 100% because in many cases perpetrators displayed more than one behavioral red flag.
72 | 2010 RepoRt to the NAtioNs ON OccuPATIONAl FRAUD ANd AbuSE