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Table of Contents

6 Limiting Fraud Losses

Respondents were asked whether the victim organizations in the cases they reviewed
had certain anti-fraud measures in place at the time the frauds occurred. The three
measures tested for were anonymous reporting mechanisms (typically hotlines),
internal audit or fraud examination departments, and external audits. The following
chart shows the percent of victim organizations that had adopted these measures at the
time of their frauds. The numbers are very similar to the results from our 2002 surveys.

Frequency of Anti-Fraud Measures

74.7%
External Audit 73.0%
Anti-Fraud Measures Internal Audit 57.7% 2004

57.2%

2002
36.8%
Anonymous Hotline
35.2%

0% 20% 40$ 60% 80%
Percentage of Victims That had Anti-Fraud Measures

Anonymous Fraud Hotlines
In order to test the effectiveness of each anti-fraud control in limiting losses, we
measured the median loss for organizations that had each control, versus the median
loss in organizations that did not. Using this
test, we found that anonymous reporting
ANONYMOUS REPORTING
mechanisms showed the greatest impact on
MECHANISMS HAD THE
fraud losses. Organizations that did not have GREATEST IMPACT ON
reporting mechanisms suffered median losses FRAUD LOSSES.
that were over twice as high as organizations
where anonymous reporting mechanisms had
been established. This was consistent with the
findings of our 2002 Report.

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