Watch those invoices and double-check those checks
Not-for-profits continue to make up the least amount of reported cases of fraud in the latest Report to the Nations on Occupational Fraud and Abuse 2012 Global Fraud Study, by the Association of Certified Fraud Examiners.
That's the good news.
When broken down by industry, the not-for-profits are in the middle of the pack and actually increased the number of cases reported from 2010.
In a more general outlook, fraud at not-for-profits only amounted to 10.4 percent of the cases reported to by certified fraud examiners in this latest report. That's down from 2008, but up nearly a full percentage point from 2010 (9.6 percent). More than two-thirds of fraud were reported by either a private company (39.3 percent, down from 42.1 percent in 2010) and a public company (28 percent, down from 32.1 percent in 2010).
Looking at fraud by industry of victim organizations, the report shows religious, charitable and social services groups make up 3.9 percent of the fraud cases, which is up from 2.3 percent reported in 2010. The sector with the most reported cases is banking and finance services, 16.7 percent, which is about the same as in 2010 (16.6 percent).
Of the 54 religious, charitable and social service-related cases, 51.9 percent were fraud by billing, followed by check tampering, 33.3 percent, and expense reimbursements, 31.5 percent.
How fraud is detected
According to the report, occupational fraud is more likely to be detected by a tip than by any other method. The majority of tips reporting fraud come from other employees.
Other findings:
- The typical organization loses 5 percent of its revenue each year.
- The median loss of occupational fraud cases in this study was $140,000, but more than a fifth of the cases amounted to at least $1 million.
- Frauds reported in this study lasted a median of 18 months before being detected.
- Asset misappropriation was by far the most common type of occupation fraud, comprising 87% of the cases in this report.
- The vast majority, 77 percent of all frauds in the study were committed by people working in one of six departments: accounting, operations, sales, executive/upper management, customer service and purchasing. Details: www.afce.com.
