Page 523 - ACFE Fraud Reports 2009_2020

Victim Organizations

Anti-Fraud Controls at Small Businesses
When it comes to fighting fraud, many small businesses face an uphill battle. These entities not only incur losses as
large as bigger organizations (see Figure 41 on page 32), but they typically have fewer resources with which to combat
this threat. The combination of these factors leaves small businesses particularly vulnerable to occupational fraud. In
addition, the working environment and limited staff size in many small businesses often relies upon, and even requires,
an increased level of trust among the individuals performing daily operational tasks. As most anti-fraud professionals
know, trust is not an internal control. In fact, trust in the wrong person can lead to disaster.

Figure 48 illustrates the frequency with which small businesses enact anti-fraud controls, compared to their larger coun-
terparts. While it is understandable that small businesses do not have the resources necessary to invest in some of the
more expensive internal controls noted, several controls—such as a code of conduct, management review procedures,
and fraud training for staff members—can be implemented with minimal investment. Small businesses are uniquely
susceptible to fraud in many ways, but there are opportunities for improvement in the measures they use to mitigate
this risk.

Figure 48: Frequency of Anti-Fraud Controls by Size of Victim Organization

External Audit of F/S 56.2% 94.2%
Code of Conduct 53.8% 91.3%
Internal Audit Department 38.6% 88.3%
Management Certification of F/S 43.2% 83.7%

External Audit of ICOFR 37.1% 79.9%
Independent Audit Committee 28.0% 40.4% 74.6%
76.9%
ANTI-FRA UD CONTROL Fraud Training for Managers/Executives 22.8% 61.9% 74.1%
Management Review
25.7%
Hotline
Fraud Training for Employees
62.6%
23.6%
Anti-Fraud Policy
59.7%
27.6%
Employee Support Programs 23.7% 55.6%
15.7%
Dedicated Fraud Department, Function, or Team 51.5%
Formal Fraud Risk Assessments 15.8% 49.2%
Surprise Audits 18.0% 45.8%

Proactive Data Monitoring/Analysis 17.9% 43.8% <100
Employees
Job Rotation/Mandatory Vacation 10.0% 23.1%
+100
Rewards for Whistleblowers 7.2% Employees
13.5%
0% 20% 40% 60% 80% 100%
PERCENT OF CASES

REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE 39