Internal Fraud: A Growing, Global Problem

Occupational fraud, mostly through employee theft, is a growing, global problem for all public and private sector organizations. About 5 percent of an organization's revenue is lost to these fraud incidents. That translates into a potential total loss approaching $3 trillion a year, according to a new report by the Association of Certified Fraud Examiners (ACFE). [ See this recent interview on fraud trends with the ACFE's Allan Bachman. ] Occupational fraud, offline and online, is broadly defined as an employee's misuse or misappropriation of an employer's resources or assets for personal gain. What makes this insider fraud so devastating is that most incidents take18 months to detect -- enough time to put a small business out of business or severely damage a corporation's reputation and employee morale. The two sectors most stricken by incidents of occupational fraud are two of the most regulated -- banking/financial services and the government/public administration. The problem is that the controls put into place to find and combat many forms of fraud, such as internal audits, are not so effective when it comes to detecting occupational fraud. Posted in: Internal Fraud