Every two years, the ACFE report finds that by far the most fraud is discovered through reports. Recent research by KPMG confirms this way of detecting fraud. How can you do this yourself?
In our trainings, we regularly refer to the Association of Certified Fraud Examiners’ (ACFE) biennial “Report to the Nations,” which shows that each year about 5% of organizations’ revenue is lost to fraud. And that most fraud, nearly half, is discovered as a result of reports. That’s always a bit of a sobering conclusion for Ethics & Compliance Officers, Integrity Managers, internal and external auditors. They are nowhere near that.
Recently, KPMG published their report “Global Profiles of the Fraudster. The basis of the report is the 250 fraud cases KPMG has investigated over the past five years. What does it reveal?
Although no two fraudsters are the same, it was possible to compile a profile of the typical fraudster. For example, fraudsters are often employed for a long time; of the fraudsters surveyed, 65% worked for the organization for more than six years. They are often men who are between 36-55 years old. They did not commit fraud because they were under pressure to meet certain targets. Usually financial gain and greed were their main motivations, followed by opportunism. Often they also worked with 2-5 other individuals. Most frauds occurred in the Operations, Finance, Purchasing or Management departments. Only then followed by the sales department.
Many organizations had poor mitigation measures in place. And KPMG also concludes that most fraud comes to light through reports, about 28 percent of all fraud. That in itself is somewhat lower than what typically comes out of ACFE research. But KPMG also stresses the importance of a good speak-up culture. We can only agree with that.
So how do you achieve such a good speak-up culture? We go into that in detail in our Whistleblower Protection Act course.
