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Data Bank Focus On: Occupational Fraud

April 2, 2012
Related Topics: Top Stories - Frontpage, Miscellaneous Legal Issues, Retaliation, Wrongful Discharge, Legal
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Occupational fraud—internal theft perpetrated by a company employee, manager, executive or owner—costs organizations on average 5 percent of their annual revenue, according to the latest fraud study from the Association of Certified Fraud Examiners. The report shows that fraud controls work at reducing losses, and the most effective among them is the whistle-blower hot line. Internal and external audits, on the other hand, are among the least effective controls.

Hot lines are the most effective means for controlling fraud, and tips are the most common means for detecting fraud. While most of these tips come from employees, they also come from customers, vendors, competitors and acquaintances of the perpetrator. Companies that are serious about minimizing their losses from fraud would do well to publicize fraud-reporting policies and programs broadly, not only including employees but also customers, vendors, shareholders and other stakeholders.

Hot lines are the most effective means for controlling fraud, and tips are the most common means for detecting fraud. While most of these tips come from employees, they also come from customers, vendors, competitors and acquaintances of the perpetrator. Companies that are serious about minimizing their losses from fraud would do well to publicize fraud-reporting policies and programs broadly, not only including employees but also customers, vendors, shareholders and other stakeholders.

Workforce Management, April 2012, p. 18-19

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