David Anderson is principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides a full range of fraud investigation, forensic accounting, and marital dissolution services in Philadelphia and the Delaware Valley.
Every two years, the Association of Certified Fraud Examiners (ACFE) commissions a survey of fraud in the United States and abroad. The ACFE just released its 2022 study entitled “Occupational Fraud 2022 – A Report to the Nations.”
Over the next several weeks, I will discuss some of the key findings from the 2022 report. Up first, here are some general observations regarding fraud:
- The ACFE study estimates that the typical business/organization (including non-profit organizations) is losing about 5 percent of revenue each year to fraud.
- The median loss from fraud is $117,000. This is down 6 percent from the $125,000 median loss identified in the 2020 Report and down 10 percent from the $130,000 median loss identified in the 2018 Report.
- Twenty-five percent of all frauds result in a loss of over $600,000.
- The median duration of reported frauds is 12 months, down 14 percent from the median duration of frauds identified in the 2020 Report and down 25 percent from the 2018 Report duration of 16 months.
- Overall, the 10-year trend shows that frauds are being caught faster and therefore resulting in a smaller overall median loss.
- Smaller businesses (those with fewer than 100 employees) experienced the highest median loss at $150,000.
- Asset misappropriation schemes (frauds involving the theft of cash, inventory, supplies, equipment, or other company assets) remained the most common scheme, remaining at 86 percent of all fraud schemes (versus 89 percent in the 2018 Report). Median asset misappropriation losses remained at $100,000 (versus $114,000 in the 2018 Report).
- Financial statement fraud remains the least common scheme at 9 percent (versus 10 percent in the 2020 Report), but results in the highest losses – $593,000 – down 38 percent from the $954,000 per fraud in the 2020 Report.
- Internal control weaknesses, including inadequate separation of duties, were responsible for nearly 49 percent of all frauds reported in the 2022 Report (up a whopping 48 percent from the 33 percent shown in the 2020 Report).
- Eight percent of frauds discussed in the 2022 Report involved cryptocurrency with 48 percent of those frauds involving bribes and/or kickbacks paid in cryptocurrency and 43 percent of those frauds involving misappropriated assets being converted to cryptocurrency.
- Fifty-two percent of the frauds in the 2022 Report were affected in some way by COVID-19 related factors which resulted in changes in staffing, processes and/or controls.
- The 2022 Report identified 18 different anti-fraud controls that companies had implemented (These will be discussed in greater detail in a later blog article). It found that every control implemented resulted in a reduction in both the duration and amount of fraud.
The next blog article in this series will discuss how frauds are detected and the characteristics of the people who commit fraud.
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, fraud deterrence, litigation support, economic damage analysis, business consulting and outsourced CFO services. Company principal David Anderson is a forensic accounting expert in Philadelphia who has more than 30 years of experience in financial and operational leadership positions and is a Certified Public Accountant, a Certified Valuation Analyst, and a Certified Fraud Examiner in Philadelphia.
If you require the services of a Certified Valuation Analyst in Philadelphia 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 email@example.com.