The Cost of Occupational Fraud

Many management teams underestimate the true financial impact of occupational fraud and abuse. According to the Association of Certified Fraud Examiners (ACFE) in their report Occupational Fraud 2024: A Report to the Nations, analysis of 1,921 investigated cases from 138 countries provides critical insight into the global scope and consequences of such fraud.

Key Findings from the Report:

Median Loss: The median loss per case was $145,000.
Duration: Frauds typically lasted a median of 12 months before detection.
Most Common Scheme: Asset misappropriation was the most frequent type, occurring in 89% of cases and causing a median loss of $120,000.
Costliest Scheme: Financial statement fraud, though less common (just 5% of cases), was the most damaging with a median loss of $766,000.
Corruption: Corruption schemes accounted for 48% of cases and had a median loss of $200,000.

Who Are the Victims?

Victims of occupational fraud are organizations defrauded by insiders—employees, managers, executives, or owners. According to the report:

42% of victim organizations were privately held companies
26% were publicly traded companies

This means that more than two-thirds of all cases involved for-profit businesses.

Small businesses (with fewer than 100 employees) are particularly vulnerable. Although smaller in size, these organizations suffered a median loss of $141,000, highlighting the disproportionate impact fraud has on them compared to larger companies with more resources for prevention and detection.

Why Fraud Prevention Matters

Fraud can originate internally (e.g., from employees or executives) or externally (e.g., from customers or vendors). It is essential for management to understand the potential consequences and adopt a proactive approach to prevention. Strong fraud prevention program can help to: