The Association of Certified Fraud Examiners (ACFE) has been sharing the results of its annual survey of fraud practitioners (its members) for many years.
It has now released the 12th edition, Occupational Fraud and Abuse 2022: A Report to the Nations.
As usual, it contains a wealth of useful information.
But it has to be put into context.
How significant is fraud risk?
The ACFE says that CFEs estimate that “organizations lose 5% of revenue to fraud every year”.
Is that credible?
Actually, it is not totally beyond the realms of the possible – although it seems high to me! In the convenience store business, we were willing to accept up to 3% of revenue in store thefts because the cost of bringing it down would be greater than the reduction in losses; but for the business as a whole, including its gas station and oil refining sides, the total losses from fraud were far less. In the technology companies where I was CAE, fraud existed (mostly revenue fraud) but was, again, far less than 3%.
Testing this further…
If we take the ACFE survey results for the Energy Industry, 97 cases were reported with a median loss of $100,000. The median across all industries was $117,000 and the average loss was $1,783,000. If we assume the same ratio between the median and the average applies to Energy, that means that the…
