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Posted by  in Fraud Awareness

It is International Fraud Awareness Week and, for the 3rd straight year, DARTON GROUP continues to promote anti-fraud awareness this week as an Official Supporter of the movement.

This year’s event comes on the heels of a recent Harvard Business School Management Development Program class in which DARTON GROUP co-founders Rochelle Rivas and Mark Weber participated.  The class reviewed and discussed a case study on Enron – the former energy, commodities and services corporation known for willful corporate fraud and corruption. 

Key takeaways from the class?  Human behavior mandates that corporate fraud can’t be totally eliminated.  There is always the risk of fraud.  Effective anti-fraud leaders must take steps to increase awareness; to understand how to create cultures, processes and controls to minimize the risk of fraud; and to implement processes and the means to effectively detect and report fraud.

Fraud happens everywhere.  It has happened in our backyard here in the Charlotte, NC region (read the case “Former Bank Vice President and Co-Conspirator Sentenced to Prison for $11.2 Million Conspiracy” here) and it can happen in your backyard, too.

Last year, the Association of Certified Fraud Examiners (ACFE) published its 2010 Report to the Nations on Occupational Fraud & Abuse. For the first time, the report included global data among the 1,843 cases of fraud that were studied.

Key findings from the 84-page report included:

  • Fraud schemes among U.S organizations are costly. Among the 1,021 U.S. cases in the study, the median fraud loss was $105,000. Billing schemes were present in 27.6 percent of these cases, while corruption was reported in 21.9 percent of cases.
  • Fraud committed from the top of an organization is the most damaging. While a large percentage of U.S. frauds in the study were committed by lower-level employees (46.2 percent) and caused a median fraud loss of $50,000 it was frauds committed by owners/executives (17.1 percent) that did the most damage with a median loss of $485,000. Frauds committed by managers (36.7 percent) had a median loss of $150,000.
  • A slight gender gap still exists in U.S. fraud cases. More than 57 percent of the U.S. frauds in the study were perpetrated by males. However, this gender gap is narrower than what was found in cases from most other regions in the world, most notably Asia (86.7 percent male) and Europe (82.1 percent male).
  • More frauds are detected by tip than by other means. In a trend reflected worldwide, the impact of anonymous fraud hotlines is clear, as 37.8 percent of the U.S. frauds in the study were detected by tip, followed by management review (17.1 percent) and internal audit (13.7 percent).

Read the full report here.

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