7/27/2017
For most business owners, the idea that a trusted employee would steal from the company is almost unthinkable. After all, many employees have been with the company for years, and some may even be family members.
But the truth is that occupational fraud is a serious threat to businesses of all sizes. According to the 2016 Association of Certified Fraud Examiners (ACFE) Report to the Nations on Occupational Fraud and Abuse, fraud perpetrators tend to display certain behavioral warning signs. These are red flags that all employees should be looking out for to help reduce fraud.
In fact, the ACFE says that at least one red flag was exhibited in 91 percent of the fraud cases they analyzed in the report. And in 57 percent of cases, multiple red flags were observed before the fraud was detected.
Here are the top five red flags identified by the ACFE:
According to the ACFE, men account for nearly one-third (69 percent) of all fraud perpetrators. Male fraudsters also generally cause larger fraud losses.
A little over half (55 percent) of all fraudsters are between the ages of 31 and 45, and nearly half (47 percent) have a college degree. Fraud losses generally rise with age and education level. Almost half of the fraud cases in the ACFE report involve collusion, with multiple perpetrators working together to commit fraud.
Interestingly, just 5.2 percent of fraudsters had been previously convicted of a fraud-related offense. And 83 percent had never been terminated or punished for any form of fraud-related conduct prior to the crimes in the ACFE study.
No business is immune to fraud, so pay close attention to behaviors like these that could be red flags for fraud. Also talk with your financial advisors about how to strengthen your internal controls to help further detect and deter fraud.
Our accountants have seen it all. We can help you decrease the likelihood of fraud in your company — visit our litigation support team here.