|
The Association of Certified Fraud Examiners conducted surveys of its members in 1996 and again in 2002 to identify the scope of the employee theft problem. This survey is referred to as the Wells Report, named after the Association's founder and Chairman Joe Wells, CPA CFE. A summary of the survey findings include:
- The 2002 Report to the Nation on Occupational Fraud and Abuse - The Wells Report - covers 663 occupational fraud cases that caused more than $7 billion in losses.
- Certified Fraud Examiners estimate that six percent of revenues will be lost in 2002 as a result of occupational fraud and abuse. Applied to the U.S. Gross Domestic Product, this translates to losses of approximately $600 billion or about $4,500 per employee.
- More than half of the frauds in this study caused losses of at least $100,000 and nearly one in six caused losses in excess of $1 million.
- All occupational frauds fall into one of three categories: asset misappropriations, corruption, or fraudulent statements.
- More than 80 percent of occupational frauds involve asset misappropriations. Cash is the targeted asset 90 percent of the time.
- Corruption schemes account for 13 percent of all occupational frauds and they cause more than $500,000 in losses, on average.
- Fraudulent statements are the most costly form of occupational fraud with median losses of $4.25 million per scheme.
- The average scheme in this study lasted 18 months before it was detected.
- The most common method for detecting occupational fraud is by a tip from an employee, customer, vendor or anonymous source. The second most common method is by accident.
- Organizations with fraud hot lines cut their fraud losses by approximately 50 percent per scheme. Internal audits, external audits, and background checks also significantly reduce fraud losses.
- The typical perpetrator is a first-time offender. Only seven percent of occupational fraudsters in this study were known to have prior convictions for fraud-related offenses.
- Insider theft is growing at 15% annually. (Justice Department)
- Employee theft amounts to 4% of food sales at a cost in excess of $8.5 billion annually. 75% of inventory shortages are attributed to employee theft. (National Restaurant Association)
- The Labor Law Industry has increased by 2200%. (Equal Employment Opportunity Commission)
|
