Page 342 - ACFE Fraud Reports 2009_2020

Detection of Fraud Schemes

The initial detection of a fraud scheme is often the
most crucial moment in the fraud examination pro-
cess — decisions must be made quickly to secure evi-
dence, mitigate losses and execute the best investiga-
tion strategy available. The method by which a fraud
is uncovered can open or close several options for
an organization. For instance, the outcome of a case
might vary substantially if the first time management
learns of an alleged fraud is through an anonymous
tip, as opposed to a law enforcement action.

Moreover, analyzing the means by which organiza-
tions detect instances of fraud gives us insight into
the effectiveness of controls and other anti-fraud mea- Frauds are much more likely to be de-
sures. We asked respondents to provide information tected by tips than by any other method.
about how the frauds they investigated were initially
uncovered, allowing us to identify patterns and other data is the ongoing importance of tips, which have
interesting data regarding fraud detection methods. been the most common method of initial detection
since we first began tracking this data in 2002. As in
Initial Detection of our 2010 Report, management review and internal au-
Occupational Frauds dit were the second and third most common methods

Perhaps the most prevalent trend in the detection of detection, respectively.

Initial Detection of Occupational Frauds

Tip 43.3% 2012
| 2012 REPORT TO THE NATIONS on occupational FRAUD and abuse
40.2%
Management Review 14.6%
15.4% 2010
Detection Method Account Reconcilliation 4.1% 7.0%
14.4%
Internal Audit
13.9%
By Accident
8.3%
4.8%
6.1%
Document Examination
5.2%
External Audit 3.3%
4.6%
Notified by Police 3.0%
1.8%
Surveillance/Monitoring 1.9%
2.6%
Confession 1.5%
1.0%
IT Controls 1.1%
0.8%
Other* 1.1%
0% 10% 20% 30% 40% 50%
Percent of Cases
*“Other” category was not included in the 2010 Report.

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