Page 672 - ACFE Fraud Reports 2009_2020

Velocity of Fraud Schemes

Recognizing that not all fraud schemes affect com- shows, financial statement fraud schemes have the
panies equally and that organizations must make greatest velocity of USD 39,800 per month, followed
decisions in how and where to direct their anti-fraud by corruption schemes, with a velocity of USD 11,100
efforts, we wanted to know how quickly occupational per month. Because these schemes tend to result in
frauds tend to cause harm. For each case reported larger losses very quickly, organizations might use this
to us, we divided the loss amount by the number of data to prioritize their investments in mechanisms to
months the scheme lasted to determine what we refer prevent and quickly detect these types of fraud. On
to as the scheme’s velocity. The median velocity for all the other end of the spectrum, register disbursement
cases in our study was a loss of USD 8,300 per month. schemes and expense reimbursement schemes tend
to grow more slowly, with a velocity of USD 800 and
Analyzing the velocity by scheme type revealed that USD 1,400 per month, respectively, meaning orga-
certain types of occupational fraud schemes cause nizations typically have more time to uncover these
damage much more quickly than others. As Figure 8 schemes before losses become significant.

FIG. 8 What is the typical velocity (median loss per month) of different occupational fraud schemes?

Financial statement fraud
$39,800
Corruption
$11,100
Noncash
$6,000
Check and payment tampering
$4,600
Billing
$4,200
Cash larceny
$4,000
Skimming
$2,900
Payroll
$2,600
Cash on hand
$1,700
Expense reimbursements
$1,400
Register disbursements
$800

16 How Is Occupational Fraud Committed? Report to the Nations