According to ACFE research, organizations worldwide lose an average of 5 percent of their revenues each year to fraud. And criminals are using ever-increasing sophistication to pilfer their employers’ assets. Clearly, companies cannot afford to ignore indicators of fraud that may exist. With so much at stake, management must proactively look for fraud.
Often, fraud cases can be detected if staff members, auditors, managers, and executives are observant of some of the indicators—or red flags—that are present in many common fraud schemes. A red flag is a circumstance, or set of circumstances, that is unusual in nature or varies from the normal activity; it is a signal that something is out of the ordinary and should be further investigated.