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October 25, 2021

Survey puts at-work-fraud loss at $2.9 trillion globally

Occupational fraud costs organizations about 5 per cent of their revenue annually, according to the latest data from the Association of Certified Fraud Examiners.

The ACFE brief, entitled “Report to the Nations on Occupational Fraud and Abuse,” found the median loss caused by occupational fraud was roughly $160,000, with nearly one-quarter of the frauds involving losses of at least $1 million.

In many cases, the criminal activities lasted an average of 18 months before even being detected.

The study also found that companies with fewer than 100 employees suffered the greatest percentage of employee theft of all the companies studied, largely because small businesses tend to have far fewer anti-theft controls than larger organizations.

Sticky-fingered employees, commonly between the age of 31-45 and more likely to be male than female, generally rationalize their behaviour by arguing that the company has wronged them in some way, that they're underpaid, or there's such a lack of control over inventory that their employers clearly don’t care that much in the first place. 

As for how the scams were discovered, the results aren't heartening ― unless you're the one backing up the truck.

The study suggests fraud schemes typically continue for months or years before they’re detected, and that tips from insiders ― informants usually fall into one of three categories: ex-lovers, ex-employees, and ex–business partners ― represent the most common method of detection, three times as often as do management reviews, internal audits, or account reconciliations.

The most common behavioural red flags displayed by the perpetrators were living beyond their means (43 per cent) and experiencing financial difficulties (36 per cent) ― statistics, it seems, that describe most of the people I know.

Have you suffered from employee fraud or pilferage? How did you work against it? As a hard-pressed worker, where do you draw the line?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...