Does Your Organization Have Good Internal Controls?

Jun 2, 2016 | By: Jeremiah Leppert

Association of Certified Fraud Examiners' Report

The Association of Certified Fraud Examiners (ACFE) recently issued their 2016 edition of the Report to the Nations, detailing the results of a global fraud survey. The survey participants reported 2,410 cases of occupational fraud. The median loss was about $150,000. The Certified Fraud Examiners participating in the report estimate that the typical organization loses about 5% of revenue annually to fraud.

One of the biggest takeaways from this report is the reliance, or lack thereof, the victim organizations had on internal  s. (Internal controls are processes designed to provide assurance that the company is operating effectively, efficiently, and reliably; think checks and balances.) In 29.3% of reported cases, the organization had no internal controls! Furthermore, 20% of the cases involved an override of existing internal controls. A strong control environment reduced losses between 40% and 50% and lowered the duration of the fraud by about 50%.

The report shows that the longer a fraud lasts, the greater the loss. When a fraud went on for six months or less, the median loss was $45,000. At between one and two years in duration, losses rose to around $150,000. When the fraud went on for over four years, the median loss exceeded $700,000. The median duration in this study was 18 months, but almost one-third of the cases went on for at least two years before they were detected.

For more information on the Report to the Nations, read about it here.

If you are unsure about your internal controls, please give us a call. Our audit department can help you analyze and evaluate your systems to see if there are areas where better procedures could help to bring irregularities to light..


Web Design & Web Development by LVSYS