Report: Companies worldwide lose 5% of revenue to fraud
Austin, Texas Organizations around the world lose an estimated 5% of their annual revenues to fraud, according to a survey of certified fraud examiners who investigated cases between January 2008 and December 2009. Applied to the estimated 2009 Gross World Product, this figure translates to a potential total fraud loss of more than $2.9 trillion, the report said.
The Association of Certified Fraud Examiners (ACFE) published the results of the survey and the report includes global data among the 1,843 cases of fraud that were studied.
The report found that, not surprisingly, fraud schemes are extremely costly. The median loss caused by the occupational fraud cases in the ACFE study was $160,000. Nearly one-quarter of the frauds involved losses of at least $1 million.
Occupational frauds are much more likely to be detected by tip than by any other means. This finding has been consistent since 2002, when the ACFE began tracking data on fraud-detection methods.
Meanwhile, fraud committed by owners and executives were more than three times as costly as frauds committed by managers, and more than nine times as costly as employee frauds. Executive-level frauds also took much longer to detect.
The report also indicated that small businesses are especially vulnerable to occupational fraud. These organizations are typically lacking in anti-fraud controls compared with their larger counterparts, which makes them particularly vulnerable to fraud.