The Association of Certified Fraud Examiner’s (ACFE) 2010 Report to the Nations on Occupational Fraud and Abusecompiled 1,843 cases of occupational fraud worldwide between January 2008 and December 2009. The survey estimated that a typical organization lost 5 percent of its annual revenue to fraud with a median loss of $160,000; nearly one-quarter of the frauds involved losses of at least $1 million. Applied to the 2009 Gross World Product, this figure translates to fraud losses of more than $2.9 trillion. The ACFE study provides data that helps in the prevention of fraud. The study showed that small organizations are disproportionately victimized by fraud and typically lack controls compared to larger organizations, and that more than 80 percent of fraud was committed by individuals working in one of six departments: accounting, operations, sales, executive/upper management, customer service or purchasing.
To combat cases of fraud, many companies have hired teams of auditors, physical and virtual security experts, compliance personnel, lawyers and even fraud investigators. However, in the majority of cases, utilizing these measures has only minimized the amount of fraud that has occurred. Clearly, the hiring of these individuals is not the total solution to the fraud problem. Some of the larger Fortune 500 companies have gone farther and hired a corporate security officer to coordinate the activities of all of the areas mentioned. The creation and implementation of a CSO, in some cases, has successfully reduced the amount of fraud within the corporation. Yet, for many companies the hiring of a CSO is not always possible, and in many situations it is the lack of this type of coordination that allows for fraud to occur. The lack of coordination makes any strategic program implementation very difficult. Whether the coordination of efforts is through a single voice like a CSO or with the unified efforts of several departments working together, a planned, coordinated approach to fraud reduction is an effective reduction strategy.