Fraud Discovery
It is interesting to examine how frauds throughout Europe are discovered:
Approximately 75% of
frauds are discovered
by these top three methods
% |
Discovered By |
|
| 1. |
40% | Tip |
| 2. |
17.6% | Internal Audit |
| 3. |
16.1% | Management Review |
| 4. |
6.5% | By Accident |
| 5. |
5.8% | Account Reconciliation |
| 6. |
5.2% | Document Examination |
| 7. |
3.9% | External audit |
| 8. |
3.2% | Surveillance and Monitoring |
| 9. |
1.3% | Police Notification |
| 10. |
0.6% | IT Controls |
*Source ACFE Report to the Nations 2010
Note from point 7 above that less than 1 in 25 frauds are discovered by external audit which is often cited (wrongly) as a check against fraud.
Infact the wording of UK audit reports specifically exclude any responsibility for the detection of fraud. Perception is very different to reality and this misapprehension can only assist fraudsters.
Even though the number 1 source of discovery is by tips, the potential for discovery by tips would be far greater if only more businesses and organisation actually installed facilities to receive tips.
Tip lines do not prevent fraud but they do enable frauds to be uncovered earlier.
Where fraud occurs the impact and financial cost can be dramatically reduced if it is discovered earlier.
Should you wish to discuss any discoveries or observations which alert you please just make contact with us. We are here to help you.