Page 87 - ACFE Fraud Reports 2009_2020

Table of Contents

Detection Method for Million-Dollar Schemes 14

42.6%
Tip
39.6%
Method of Detection Internal Controls 8.2% 18.0% $1,000,000+
24.6%
Internal Audit
23.8%
By Accident
21.3%

18.4%
All Cases
External Audit

Notified by Police 1.6% 10.9% 16.4%
0.9%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Percent of Cases

Another way to measure the effectiveness of various detection methods in identifying large
schemes is to measure the median loss in frauds based on how they were detected.
When we ran this data, we found, to our surprise, that the median loss in schemes
detected By Accident was $140,000, which exceeded the median loss in all other
categories. The fact that so many large frauds are detected by accident certainly implies
that there is much more opportunity for organizations to reduce costs by proactively
seeking out fraud and abuse.

The data in this chart also, once again, suggests that traditional internal controls do a
poor job of catching large frauds. The median loss among schemes detected by internal
controls was $40,000, which was less than half of the loss in the next-lowest category.

14 The sum of percentages in this chart exceeds 100% because in some cases respondents identified more than one
detection method. 21