2018 ACFE Fraud Report to the Nations

By Charles Hall | Fraud

Jun 11

Here are key findings from the 2018 ACFE Fraud Report. The survey is titled the 2018 Report to the Nations.

Key fraud findings

Every two years the Association of Certified Fraud Examiners (ACFE) issues a fraud report based on hundreds of actual fraud cases. The report provides great insights into how fraud occurs (the method), the persons stealing (the fraudster), and the damage (the amount of losses). 

If you are an auditor (internal or external), then you need to be familiar with the findings in this report. Understanding how theft occurs will enable you to detect and prevent it in the future.

Here are key points from the report.

2018 ACFE Fraud Report Findings

  • Organizations lose 5% of their revenues to fraud
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    The median duration of a fraud was 16 months
  • The median loss per case was $130,000
  • The median loss per case when owners or executives were involved was $850,000
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    Businesses with a 100 or fewer employees suffered a median loss per case of $200,000
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    Businesses with more than 100 employees suffered a median loss per case of $104,000
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    In 40% of the cases, tips were the initial detection method (53% of the tips came from employees of the organization; 32% of the tips came from vendors, customers, and competitors)
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    Fraud losses were 50% smaller for organizations with fraud hotlines
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    Only 4% of the fraudsters had a prior fraud conviction
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    Occupational fraud was committed in the following categories: (1) asset misappropriation (89%), (2) corruption (38%), and (3) financial statement fraud (10%) -- in some cases, the fraudster used multiple schemes
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    The median losses were (1) $114,ooo for asset misappropriation, (2) $250,000 for corruption, and (3) $800,000 for financial statement fraud
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    70% of corruption cases were committed by someone in a position of authority
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    82% of corruption cases were committed by males
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    50% of corruption cases were detected by a tip
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    Internal control weaknesses led to nearly half of the fraud
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    Small businesses typically have fewer anti-fraud controls than larger organizations, leaving them more vulnerable
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    Data monitoring/analysis and surprise audits were correlated with the largest reductions in fraud losses and duration (yet only 37% of victim organizations implemented these controls)
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    A majority of the victim organizations recovered nothing
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    Fraudsters that were with the company for more than five years stole an average of $200,000
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    Fraudsters that were with a company for less than five years stole an average of $100,000
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    The industries with the highest levels of fraud were (1) Banking and Financial, (2) Manufacturing, (3) Governments, and (4) Health Care
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    The departments with the highest level of fraud were (1) Accounting (14%), (2) Operations (14%), (3) Sales (12%), and (4) Executive/upper management (11%)
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    69% of frauds were commented by males with a median loss of $156,000 (the median loss from female thefts was $89,000)
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    61% of the fraud cases involved someone with a university degree or postgraduate degree
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    When one fraudster was involved, the median loss was $74,000
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    When two fraudsters were involved, the median loss was $150,000
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    When three or more fraudsters were involved, the median loss was $339,000
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    Living beyond their means was the primary behavioral red flag (41% of cases) 
of fraud from asset misappropriations

Get Your Free Copy of ACFE Report

Join the ACFE 

I have been a member of the Association of Certified Fraud Examiners since 2004. Why? Because I want to be a better auditor. And I have found that the ACFE has given me a much greater understanding of how fraud happens and how to prevent it. The organization has made me a much better auditor. Consider joining this organization. (You can join without becoming a Certified Fraud Examiner (CFE), though I recommend doing that as well. Learn more about becoming a CFE.) You'll be glad you did.

CPA Hall Talk Fraud Articles

For more information about fraud, see White Collar Crime is Knocking at Your Door. There you will see a list of fraud-related articles that I have written.

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About the Author

Charles Hall is a practicing CPA and Certified Fraud Examiner. For the last thirty years, he has primarily audited governments, nonprofits, and small businesses. He is the author of The Little Book of Local Government Fraud Prevention and Preparation of Financial Statements & Compilation Engagements. He frequently speaks at continuing education events. Charles is the quality control partner for McNair, McLemore, Middlebrooks & Co. where he provides daily audit and accounting assistance to over 65 CPAs. In addition, he consults with other CPA firms, assisting them with auditing and accounting issues.