Page 443 - ACFE Fraud Reports 2009_2020

Control Weaknesses That Contributed to Fraud
We asked survey respondents what they thought were the primary internal control weaknesses that contributed to the
frauds they had investigated. As noted in Figure 39, in nearly one-third of the cases, the victim organization lacked
the appropriate internal controls to prevent the fraud, which reinforces the importance of targeted anti-fraud
controls. A lack of controls played an even bigger role in those cases affecting small businesses; this was attributed
as the primary weakness at more than 41% of cases at organizations with fewer than 100 employees. Additionally,
according to the CFEs who participated in our study, one-fifth of the reported cases could have been prevented if
managers had done a sufficient job of reviewing transactions, accounts or processes.

Figure 39: Primary Internal Control Weakness Observed by CFE

32.2%
Lack of Internal Controls 35.5%
37.8%
20.0%
Lack of Management Review 18.7%
17.9%
Override of Existing 8.4% 18.9%
19.4%
Internal Controls
MOST IMPORTANT CONTRIBUTING FACTOR Lack of Competent Personnel 2.2% 3.3% 4.9% 6.9%
19.2%
Poor Tone at the Top
9.1%
8.4%
7.1%
7.3%
in Oversight Roles
Other*
3.5%
Lack of Independent
Checks/Audits
5.6%
2.9%
Lack of Employee
Fraud Education
1.9%
Lack of Clear 1.5% 2.5%
Lines of Authority 1.8% 2014
1.8%
0.7% 2012
Lack of Reporting Mechanism 0.3%
0.6% 2010
0% 5% 10% 15% 20% 25% 30% 35% 40%
*“Other” category was not included in the 2010 Report. PERCENT OF CASES

RepoRt to the NatioNs oN occupatioNal FRaud aNd abuse 39