On the heels of the release of the , there is no better time than now to evaluate your company’s internal controls on occupational fraud. The report, which is released biannually by the Association of Certified Fraud Examiners (ACFE), gathered data acquired between January 2008 and December 2009 and includes countries outside the United States for the first time.
We’ll touch on only a few of the findings, but we want to stress how critical it is to determine what internal controls your company can utilize to prevent fraud from seriously affecting your bottom line. Since we deal with many mid-market companies, we know companies of that size have limited resources to establish internal control. It’s not always easy to take a step back and identify your own company’s vulnerabilities, but it will help determine what steps need to be made.
Below are some of the highlighted findings from the 2010 Report and questions to think about. As a reminder, Stone Carlie is holding a here in St. Louis on December 15th to help you and your company improve your internal controls to decrease the chances of fraud.
- An estimated 5% of annual revenue is how much the typical organization loses to fraud. How much would that take out of your company’s annual revenue?
- The median loss caused by occupational fraud cases in the study was $160,000… but nearly one-quarter of the frauds involved losses of at least $1 million.
- Small companies are disproportionately victimized by occupational fraud, due to the lack of anti-fraud resources. What does your company do to protect itself from fraud?
- The frauds last a median of 18 months before being detected. If you’ve had any cases of fraud in your company, how long did it take to discover these cases?
We understand the current economic climate has had a dramatic effect on many businesses, especially small and mid-size ones. But this economy has also brought with it an increased risk of fraud.
Far too many companies wait until they are a victim of fraudulent activities before implementing or evaluating their internal controls. We encourage you to take the time to assess your organization’s tools and controls on at least an annual basis. Where appropriate, you should consider engaging with a CPA firm that specializes in fraud detection and protection as that cost will be significantly lower than the cost to your business of the average fraud incident.