David Anderson is principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides a full range of fraud investigation, fraud deterrence programs, and forensic accounting services in Philadelphia and the Delaware Valley.

This blog – the last in a series of five articles by forensic accounting expert David Anderson of David Anderson & Associates, a Certified Fraud Examiner in Philadelphia – continues Anderson’s discussion of the Association of Certified Fraud Examiners (ACFE) 2018 Report to the Nations – 2018 Global Study on Occupational Fraud and Abuse.

This final installment focuses on how companies and organizations react after a fraud has been discovered and what their experiences are in attempting to recover fraud losses:

• Sixty-five percent of victim companies and organizations terminated the perpetrator while another 10 percent permitted the perpetrator to resign.
• However, 14 percent of companies and organizations allowed the perpetrator to remain with the organization either with probation or on suspension (8 percent) or no punishment at all (6 percent).
• Only 44 percent of all owners and executives were terminated by the victim company or organization. Thirty-one percent were permitted to leave or resign without being terminated, and 19 percent remained with the organization.
• Fifth-eight percent of victim companies and organizations referred the matter to law enforcement. This percentage has steadily declined from 69 percent of companies and organizations which did so in 2008.
• Twenty-three percent of victim companies and organizations filed civil suit against the perpetrator. This has remained steady over the past ten years.
• Fifty-three percent of perpetrators referred to law enforcement pled guilty or no contest while another 20 percent of perpetrators were convicted at trial.
• In 18 percent of cases referred to law enforcement, the authorities declined to prosecute (most likely due to either the size of the loss not being large enough or because the company or organization could not produce sufficient documentation and other evidence for the authorities to be confident that they could obtain a conviction).
• Only 1 percent of cases referred to law enforcement resulted in the perpetrator being acquitted.
• Fifty-three percent of companies and organizations that filed civil suits received a judgment in their favor while another 27 percent of such suits were settled before a verdict was reached.
• Perpetrators obtained a favorable judgment in 15 percent of civil cases (most likely because the company or organization could not produce sufficient documentation and other evidence to convince the trier of fact of the perpetrator’s guilt).
• Victim companies and organizations which decided not to refer cases to law enforcement cited the following reasons for their decision:
  • Fear of bad publicity (38 percent of non-referred cases)
  • A belief that internal discipline was sufficient (33 percent of non-referred cases)
  • The belief that pursuing a conviction would be too costly (24 percent of non-referred cases)
  • The company or organization reached a private settlement with the perpetrator (21 percent of non-referred cases)
  • The lack of sufficient evidence to persuade law enforcement to pursue the matter (12 percent of non-referred cases)
• Fifty-three percent of victim companies and organizations recovered nothing from either the perpetrator or other sources (such as insurance).
• Thirty -two percent of victim companies and organizations made a partial recovery and another 15 percent made a full recovery.
• The larger the loss, the less the likelihood that the victim company or organization will make a full recovery:
  • For losses under $10,000, 30 percent of victim companies and organizations made a full recovery.
  • For losses between $10,000 and $100,000, 16 percent of victim companies and organizations made a full recovery.
  • For losses between $100,000 and $1,000,000, 13 percent of victim companies and organizations made a full recovery.
  • For losses over $1,000,000, 8 percent of victim companies and organizations made a full recovery.

If you require the services of a Certified Fraud Examiner or any other forensic accounting services in Philadelphia and the Delaware Valley, please contact the Philadelphia forensic accounting firm of David Anderson & Associates by calling David Anderson at 267-207-3597 or emailing him at david@davidandersonassociates.com.

About David Anderson & Associates

David Anderson & Associates is a Philadelphia forensic accounting firm that provides a full range of forensic accounting services in Philadelphia and the Delaware Valley.  The experienced professionals at David Anderson & Associates provide forensic accounting, business valuation, fraud investigation, litigation support, economic damage analysis, business consulting and outsourced CFO services.  Company principal David Anderson has more than 30 years of experience in financial and operational leadership positions and is a Certified Public Accountant, a Certified Fraud Examiner and a Certified Valuation Analyst.