Page 422 - ACFE Fraud Reports 2009_2020

Detection of Fraud Schemes

According to the fraud triangle theory — that those who
commit occupational fraud tend to have a perceived
financial need, opportunity and rationalization — the
threat of likely detection is one of the most powerful
factors in fraud prevention because it all but eliminates
the fraudster’s perceived opportunity. In this Report and
past versions, we asked respondents to provide infor-
mation on how their occupational fraud schemes were
first detected. One of the recurring trends we see is that
some detection methods are more effective than others.
When comparing the initial detection method to other
information, such as the fraud’s duration and the finan-
cial damage caused, we found substantial differences
among the various ways frauds were uncovered. Detec-
tion method, therefore, is directly related to both fraud
prevention and loss mitigation.

Additionally, the manner by which frauds are detected is not purely
incidental. Our data suggests that the likelihood of discovering Tips are consistently the most common detec-
fraud in particular ways can be shaped by the procedures and con- tion method for cases of occupational fraud
trols that an organization has in place. This information can help by a significant margin.
organizations detect frauds more efficiently.

18 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE