Every year, the Association of Certified Fraud Examiners (ACFE) publishes a report on fraud. The latest is the 12th in the series, Occupational Fraud 2022: A Report to the nations.
My congratulations and thanks go to the ACFE for an excellent report. I remember how early reports included the employees’ use of company assets like computers in their definition of fraud. I am pleased to see that gone, with every inch of this long report dedicated to information that has value.
The first point that jumps out at me is no surprise. ACFE estimates that the average organization loses 5% of its revenue each year to fraud. Now, 5% is a lot. But does it mean that fraud is a risk to the organization so high that it should be made a priority for internal audit, and a focus of the limited time of the audit committee of the board? I will let you form your own opinion.
Building on that, the median loss per case is $117,000 (down substantially from prior years), while the average loss per case is $1,783,000. As many as 21% of the cases topped a million dollars in losses. Some would have to be several million to explain the difference between the median and the average.
Compare that to the cost of control, or even the cost of investigating fraud. I am not saying that we shouldn’t have controls to prevent or detect fraud, or…
