Even in today’s world of ever-dwindling privacy, fraud in the business world is still a dramatic issue. The Association of Certified Fraud Examiners (ACFE) recently released a report revealing that businesses from around the world on average lose 5 percent of their annual revenues to employee-related fraud. They estimate total annual losses around $3.5 trillion and found the median loss was a substantial $145,000. Many of the businesses (around 24 percent) were much less fortunate with losses of $1 million or greater. It is a common business owner belief and an understandable one that the longer an employee is with an organization the more they can be trusted, but in the ACFE’s study the median fraud committed by an owner or executive was $500,000, $130,000 by a manager, and $75,000 by a bottom tier employee. Probably equally scary, the median amount of time the fraud went on before those involved were caught was 18 months. Small businesses were hit the hardest in the study from a recovery standpoint with a median loss of $154,000. They typically had the least anti-fraud controls in place the study showed resulting in them becoming easier targets.
You might be asking yourself what can your business do to prevent or curtail fraud as soon as possible. The ACFE did shed some positive light on that topic. Tips were the biggest reason fraud was put to an end in the businesses studied in over 40 percent of the cases. The tips generally came from other employees of the organizations being victimized. Businesses that have a tip hotline have a much greater chance of catching fraud. Those with a hotline in the study had 50 percent lower detection times for fraud and a 41 percent reduction in the amount stolen. Implementation of even the most common anti-fraud controls in the businesses studied reflected significant fraud deterrence. Common anti-fraud controls include: a code of conduct, employee support programs, fraud training for employees, managers, and executives, an anti-fraud policy, job rotations, mandatory vacations, and offering rewards to whistle-blowers. Feel free to read additional information here –
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