Page 513 - ACFE Fraud Reports 2009_2020

Detection of Fraud Schemes

Party to Whom Whistleblower Initially Reported
A question that frequently emerges when organizations develop and promote reporting mechanisms is: Who should
receive reports about fraud? To help provide some insight into this issue, we asked our survey participants to whom
the whistleblowers in their cases reported their suspicions. Figure 36 shows that whistleblowers’ direct supervisors
were the party most commonly reported to (20.6%). Additionally, executives (18%), fraud investigation teams (13.1%),
and internal audit departments (12.3%) each received a significant number of whistleblower reports. In reviewing the
“other” category, many of the survey responses indicated that human resources or the owner of the organization were
the party to whom the fraud was reported.

Figure 36: Party to Whom Whistleblower Initially Reported

Direct Supervisor 20.6%
Other 18.8%
Executive 13.1% 18.0%
PARTY REPORTED TO Law Enforcement or Regulator 7.4% 9.9% 12.3%
Fraud Investigation Team

Internal Audit
Coworker

Board or Audit Committee
External Audit 2.4% 6.6%
In-House Counsel 1.8%
0% 5% 10% 15% 20% 25%

PERCENT OF TIPS

Whistleblower Reports Vary Based on Department Where Fraud Occurs

Our findings indicate that the party to whom whistleblowers re- the board of directors or audit committee (22.2%) and second-most
port tends to differ based on the perpetrator’s department. Figure likely to report to law enforcement (20.4%). One explanation for this
37 includes the top three parties reported to for each department trend could be fear of retaliation from executives, making internal
that made up 5% or more of the total responses. Throughout the reporting to a direct supervisor risky. Additionally, reporting to inter-
organization, direct supervisors or executives are common parties nal audit was common when perpetrators worked in departments
who receive tips. However, when perpetrators were executives or typically made up of junior staff, such as operations (18.6%) and
in upper management, whistleblowers were most likely to report to customer services (16.7%), but not in other departments.

Figure 37: Top Three Parties to Whom Tips Were Reported Based on Perpetrator’s Department

Executive/Upper
Operations Accounting Sales Customer Service Purchasing Finance
Management
Board or
Direct Supervisor Executive Direct Supervisor Direct Supervisor Executive Direct Supervisor Audit Committee
(25.3%) (38.0%) (26.4%) (28.6%) (26.7%) (21.1%) (22.2%)
Internal Audit Direct Supervisor Executive Coworker External Audit Coworker Law Enforcement
or Regulator
(18.6%) (27.1%) (20.8%) (23.8%) (26.7%) (21.1%)
(20.4%)
Direct Supervisor
Fraud Fraud Fraud
or Fraud
Investigation Investigation Investigation Internal Audit Investigation Executive Executive
Team or Executive Team Team (16.7%) Team (21.1%) (18.5%)
(Both 15.7%) (10.1%) (17.0%) (Both 16.7%)
REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE 29