Anti-Fraud Solutions

1. Fraud costs the typical organization 6% of sales per year (based on evidence of known frauds). Depending on its profit margin, your organization will have to generate several dollars in additional sales for every dollar lost to fraud.Fraud Calculator
2. Small businesses suffer disproportionately large losses. Small businesses suffer over three times the number of fraud incidents as large companies, yet incur nearly the same median loss ($98,000 vs. $106,000).
3. Most occupational fraudsters (88%) are first-time offenders whose crimes impact just about every industry.
4. More frauds are detected by accident than through internal controls. This is true for small businesses, larger privately held companies and not-for-profit organizations.
5. The most cost-effective way of dealing with fraud is to prevent it. In addition to saving money and preserving assets, the implementation of an effective fraud prevention program can:
   • Enhance market value. A McKinsey & Company worldwide study indicated that investors are willing to pay up to 27% more for companies with good governance.
   • Reduce federal penalties. According to the Federal Sentencing Guidelines, there is a 40 percent reduction in penalties for companies using due diligence in implementing programs to detect and prevent violations of law. Further, a corporate policy that mitigates the effect of an occurrence of fraud can reduce an organization’s fine by as much as 95%.
   • Reduce audit fees. SAS No. 99 generally requires more external audit work, and hence higher fees. Establishing and maintaining strong fraud prevention programs and controls designed to mitigate fraud risks can reduce costs by providing external auditors with a foundation of controls
   • Reduce civil lawsuits. Provide employees with an outlet to voice their concerns. Establishing communication mechanisms within the company (ombudsman, anonymous tip hotline, etc.) will provide employees alternatives to approaching private attorneys, regulators or news agencies, which could lead to civil lawsuits.
   • Recover more of the loss. A recent ACFE study found that only 60 percent of organizations carry necessary fraud insurance, and of those that did, 49 percent recovered only 25 percent or less of the original loss. Prevention, by its nature, could have saved the entire loss.
   • Maintain your positive image. Recent corporate scandals illustrate the devastating effects to an organization of even a hint of fraudulent financial statement reporting. Getting in front of fraud issues with a substantive fraud prevention program is critical to maintaining and enhancing your corporate brand and image.