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

This blog is the third in a series of four posts.

This blog continues my discussion of the Association of Certified Fraud Examiners (ACFE) “Occupational Fraud 2026 – A Report to the Nations”. This week I will discuss the various controls that companies/organizations put in place to prevent fraud and how effective these controls are:

• The 2026 Report identified 18 specific anti-fraud controls and noted that all 18 were associated with lower fraud losses and quicker detection of the frauds.
• The most common anti-fraud controls employed by companies/organizations were:
  • Putting in place a code of conduct (present in 88 percent of the companies/organizations)
  • Having an external audit of the company’s/organization’s financial statements (present in 83 percent of the companies/organizations)
  • Having an active internal audit department (present in 80 percent of the companies/organizations)
  • Having management certification of the company’s/organization’s financial statements (present in 76 percent of the companies/organizations)
  • Having a confidential tip reporting hotline (present in 73 percent of the companies/organizations)
  • Having an external audit of the internal controls over the company’s/organization’s financial reporting (present in 72 percent of the companies/organizations)
  • Regular management review of financial reporting (present in 71 percent of the companies/organizations)
  • Having an independent audit committee (present in 69 percent of the companies/organizations)
  • Providing fraud training for employees (present in 67 percent of companies/organizations)
• The effectiveness of these most common controls (for the seven most effective controls) was:
  • Having regular management review of financial reporting reduced the median loss by 55 percent and the duration of the fraud by 44 percent.
  • Performing pro-active data monitoring and analysis reduced the median loss by 53 percent and the duration of the fraud by 44 percent.
  • Having a code of conduct in place reduced the median loss by 50 percent and the duration of the fraud by 33 percent.
  • Having surprise audits reduced the median loss by 50 percent and the duration of the fraud by 50 percent.
  • Having a job rotation and mandatory vacation policy in place reduced the median loss by 49 percent and the duration of the fraud by 33 percent.
  • Having a formal fraud risk assessment reduced the median loss by 47 percent and the duration of the fraud by 33 percent.
  • Providing fraud training for managers and executives reduced the median loss by 44 percent and the duration of the fraud by 31 percent.
• It is interesting to note that of the seven most effective anti-fraud controls, only two (regular management review of financials and having a code of conduct in place) were among the most frequently used controls. This points to a continuing disconnect from what company executives believe are the most effective controls and those that actually are.
• Over the past 10 years, two anti-fraud controls have seen significant increases in use:
  • Providing fraud training for employees – an increase of 15 percent
  • Providing fraud training for managers/executives – an increase of 15 percent
• Other anti-fraud controls used less frequently by companies/organizations included:
  • Having an anti-fraud policy in place
  • Have a dedicated fraud department or team.
  • Creating employee support programs (especially for those suffering from addictions/dependencies or experiencing depression)
  • Providing rewards for whistleblowers

My next blog article will discuss corruption and its impact on companies/organizations.

If you have any questions about potential fraud in your business, you should speak with a Certified Fraud Examiner from an experienced firm that provides forensic accounting services in Philadelphia and the Delaware Valley. The Philadelphia forensic accounting firm of David Anderson & Associates can be reached 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, fraud deterrence, litigation support, economic damage analysis, business consulting, and outsourced CFO services. Company principal David Anderson is a forensic accounting expert who 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.