Page 602 - ACFE Fraud Reports 2009_2020

As noted in Figure 16 on pg. 25, corruption poses Effectiveness of Anti-Fraud Controls
a significant risk to several industries, with the most Demonstrating the return on investment in anti-fraud
common occurrence of corruption schemes in the initiatives can be a difficult task, as it is nearly impos-
energy, manufacturing, and government and public sible to measure the amount of fraud prevented by a
administration sectors. Skimming schemes were also specific control. However, many anti-fraud profession-
notably more common in the arts, entertainment, and als find themselves needing to make a business case
recreation and the food service and hospitality indus- to justify additional fraud prevention and detection
tries than elsewhere, while payroll schemes occurred initiatives. To provide some visibility into the relative ef-
more frequently in the religious, charitable, or social fectiveness of various anti-fraud controls, we compared
services and the health care sectors. Interestingly, the the losses experienced by the victim organizations that
cases that occurred in religious, charitable, or social had specific controls in place against the losses experi-
services organizations also tended to involve the most enced by those that had not implemented each control.
crossover between scheme types, meaning the perpe- The results of this analysis are provided in Figure 18
trators in these cases used many different schemes to on pg. 28. Interestingly, the presence of every control
defraud the victims, rather than limiting their frauds to we analyzed was correlated with lower fraud losses.
one specific area. For example, the use of proactive data monitoring and

Anti-Fraud Controls analysis and surprise audits was associated with a
more than 50% reduction in fraud losses.
at the Victim Organization
We similarly analyzed the duration of fraud schemes
The presence of a robust system of anti-fraud con-
based on the presence or absence of each anti-fraud
trols can be a powerful deterrent, as well as a proac-
control (see Figure 19 on pg. 29). Data monitoring and
tive prevention and detection mechanism, in the fight
analysis and surprise audits were correlated with the
against fraud. Thus, organizations can benefit from
most significant reductions in fraud duration; as these
knowing which anti-fraud controls are commonly
two controls were also associated with some of the
used by their peers, as well as which tend to be the
largest loss reductions, our data indicates that they are
most effective. To help explore this information, we
among the most useful tools in the fight against fraud.
provided survey respondents with a list of 18 enti-
ty-level, anti-fraud controls and asked which, if any,
were present at the victim organization at the time
the fraud occurred. As noted in Figure 17, 80% of the
organizations had a code of conduct and underwent
external financial statement audits, while 73% had
internal audit departments, and 72% had company
management certify the financial statements. On the
other end of the spectrum, 19% of organizations had
policies requiring job rotation or mandatory vacation,
and only 12% provided rewards for whistleblowers.

26 Victim Organizations Report to the Nations