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 second 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 discuss how frauds are detected and the characteristics of the people who commit fraud:

• Most people believe that having a financial audit will detect fraud. However, the 2026 Report found that only 2 percent of all frauds were detected by external auditors, down slightly from 3 percent in the 2024 Report. The percentage of frauds detected by accident was 4 percent – double the audit rate.
• The most frequent method by which frauds were detected came from tips. The 2026 Report found that 43 percent of all frauds were detected from tips. Employees were the source of 55 percent of all tips, followed by customers (21 percent), anonymous tips (14 percent), and vendors (11 percent). The employee percentage was 3 percent higher than the 2024 report. This likely means that more employees are willing to report fraud than in the past.
• Internal auditors detected 15 percent of all frauds.
• Management review detected 13 percent of all frauds.
• The 2026 Report found that although owners and executives committed only 19 percent of all frauds, the median loss from such frauds was $475,000 (down from $500,000 in 2024). Managers committed 41 percent of all frauds with a median loss of $125,000 (down from $184,000 in 2024), and lower-level employees also committed 41 percent of all frauds with a median loss of $50,000 (down from $60,000 in 2024).
• Tenure with the organization correlated with the amount of fraud loss. The median fraud loss from employees with 1 to 5 years tenure remained at $100,000. This grew to $138,000 (down from $200,000 in 2024) for employees with 6 to 10 years tenure, and to $200,000 (down from $250,000 in 2024) for employees with more than 10 years tenure.
• Men were responsible for 71 percent of all frauds with a median loss of $125,000 (down from $158,000 in 2024). Women were responsible for 28 percent of all frauds with a median loss of $90,000 (down from $100,000 in 2024). The lower loss level for women is most likely due to the lower number of women in senior positions. However, over the past 10 years, the median loss from frauds committed by women has nearly doubled – likely due to the increase in the number of women in senior positions.
• The perpetrator’s age followed a bell curve with more than 2/3 of all frauds committed by persons between the ages of 31 and 50. The median loss correlated directly with the perpetrator’s age in that the older the person, the higher the median loss. This is most likely due to the fact that the older the person, the higher up they are likely to be in the business or organization.
• 86 percent of all perpetrators had no criminal background, meaning that they had never been charged or convicted.
• 84 percent of perpetrators displayed at least one behavioral red flag. These included:
  • Living beyond their means
  • Having known financial difficulties
  • Having an unusually close relationship with a customer or vendor
  • Having control issues, including an unwillingness to share duties
  • Known for bullying or intimidation
  • Displaying frequent irritability, suspiciousness, or defensiveness
  • Experiencing divorce or other known family problems
  • Having a “Wheeler-Dealer” attitude
  • Having known addiction problems (drugs, gambling, alcohol, etc.)
  • Frequent complaining about inadequate pay
  • Refusal to take vacations.

My next blog article will discuss the various anti-fraud controls that businesses/organizations employ, and the effectiveness of each of the controls.

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.