Page 692 - ACFE Fraud Reports 2009_2020

Internal Control Weaknesses That
Contribute to Occupational Fraud

Various factors can facilitate a perpetrator’s ability to
commit and conceal an occupational fraud scheme.
Manager-level
perpetrators
are more likely than
other perpetrators to
What are the primary internal control weaknesses that override existing
contribute to occupational fraud?
controls

Lack of reporting mechanism, <1%

Lack of clear lines of authority, 2%
Lack of employee fraud education, 3%

Lack of independent checks/audits, 5%
Lack of competent personnel in Employees 15%
oversight roles, 6% Managers 22%
Other, 6% Owner/executives 17%
Lack of internal
controls, 32%

Poor tone at
the top, 10%
Small companies large companies

Override of existing are more likely to are more likely to have
internal controls, 18% Lack of management lack internal controls controls overridden
review, 18%
Internal Control Weaknesses that Contribute to Occupational Fraud
43%
Lack of
internal
controls 28%
<100 employees
Override of 12%
existing 100+ employees
internal controls 20%

Poor tone at the top

was the primary risk factor in 22% of
all financial statement frauds. Sole perpetrators take advantage of a lack of controls,
while schemes involving collusion are supported by poor
tone at the top and an ability to override controls

37%
22% Lack of
internal controls 27%
15%

8% Override of existing 16%
internal controls
20%
Asset Corruption Financial 5% 1 perpetrator
misappropriation statement fraud Poor tone
at the top 14% 2 or more
perpetrators

36 Victim Organizations Report to the Nations