Page 666 - ACFE Fraud Reports 2009_2020

HOW IS OCCUPATIONAL

FRAUD COMMITTED?

Since the inception of the Report to the
Nations in 1996, we have analyzed more than FIG. 2 How is occupational fraud committed?
18,000 cases of occupational fraud reported 86%
to us by CFEs. In each of the 11 studies we
have conducted, we have explored the mech-
anisms used by perpetrators to defraud their
employers. In general, we have found that
the schemes used by occupational fraudsters
have stayed remarkably consistent. Even
with the move toward digital payments and
technology-based businesses, the means PERCENT OF C A SES 43%
fraudsters use to acquire their ill-gotten gains
stand the test of time. A taxonomy of these
schemes is provided in the Occupational
Fraud and Abuse Classification System, also 10%
called the Fraud Tree (see Figure 3).

Asset Corruption Financial
misappropriation statement fraud

Categories of Occupational Fraud

At the highest level, there are three primary categories of $100,000
occupational fraud. Asset misappropriation, which involves
an employee stealing or misusing the employing orga-
nization’s resources, occurs in the vast majority of fraud $200,000
schemes (86% of cases); however, these schemes also
tend to cause the lowest median loss at USD 100,000 per MEDIAN L OSS
case (see Figure 2). In contrast, financial statement fraud
schemes, in which the perpetrator intentionally causes a ma-
terial misstatement or omission in the organization’s financial
statements, are the least common (10% of schemes) but
costliest category of occupational fraud. The third category,
corruption—which includes offenses such as bribery, con-
flicts of interest, and extortion—falls in the middle in terms of
both frequency and financial damage. These schemes occur $954,000
in 43% of cases and cause a median loss of USD 200,000.

10 How Is Occupational Fraud Committed? Report to the Nations