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Choose a fraud scheme from the report and write and post a 2 – 3 paragraph response, selecting a scheme, explaining it, and summarizing key statistics and observations from the report. Find and summarize a case study (not from the textbook) as an example of the scheme you have chosen. Choose topics that you find interesting, important, or even surprising to share with your classmates. My intent is that, with a good number of students, we will get a good variety and some excellent sampling of the contents of the Report to the Nations.

OCCUPATIONAL FRAUD 2022: A REPORT TO THE NATIONS
Occupational Fraud 2022:
A Report to the nations
®
FOREWORD
On behalf of the ACFE and the greater anti-fraud community, I am pleased to present Occupational Fraud 2022: A
Report to the Nations, the latest exploration by the ACFE into the factors and toll of occupational fraud. While this is our
12th edition of the report, this particular study is unique in that it explores frauds that were investigated largely during
a global pandemic—a time when anti-fraud professionals, like so many others, were challenged to find new, innovative
ways to conduct much of their work.
And yet, our research shows how successfully Certified Fraud Examiners around the world were able to adapt. Even
during this time of disruption, occupational frauds were detected more quickly and losses were limited when compared
to prior years. While we always appreciate the participation and dedication of CFEs, this year we are especially
grateful for their contributions to this study, which highlights the work they have collectively undertaken during such a
challenging time.
Thanks to these anti-fraud experts, our research provides valuable information about the costs, methods, perpetrators,
and outcomes of occupational fraud schemes derived from more than 2.000 real cases of fraud affecting organizations
in 133 countries and 23 industries. We know that to effectively confront any problem—but certainly one this immense
and pervasive—we must first thoroughly understand it. The inaugural Report to the Nation was launched in 1996 by
ACFE Founder, Dr. Joseph T. Wells, CFE, CPA, because he recognized the need to provide this type of foundational
information about occupational fraud. In the decades that followed, we have continued this important line of study to
improve our profession’s ability to prevent, detect, and respond to fraud.
It is my hope that this report not only honors the CFEs who pushed through the challenges of the pandemic and shared
their experiences in investigating fraud during that time, but also provides actionable insight for business leaders,
the public, and the anti-fraud community as a whole on how to effectively protect organizations from the harms of
occupational fraud.
Bruce Dorris, J.D., CFE, CPA
President and CEO, Association of Certified Fraud Examiners
2
FOREWORD Occupational Fraud 2022: A Report to the Nations
CONTENTS
Foreword
2
Key Findings
4
Introduction
6
Spotlight: The Global Cost of Fraud
8
How Is Occupational Fraud Committed?
9
Categories of Occupational Fraud
9
Duration of Fraud Schemes
13
Velocity of Fraud Schemes
Perpetrator’s Education Level
55
Collusion by Multiple Perpetrators
56
Perpetrator’s Criminal Background
57
Perpetrator’s Employment History
57
Behavioral Red Flags Displayed by Perpetrators
58
Human Resources-Related Red Flags
59
Spotlight: Behavioral Red Flags of Fraud
60
15
Case Results
62
Spotlight: How Do Perpetrators Conceal Their Frauds?
17
Internal Action Taken Against Perpetrators
62
Spotlight: A Decade of Occupational Fraud
18
Spotlight: Response to Fraud
63
Cryptocurrency Schemes
20
Recovering Fraud Losses
65
Detection
21
Initial Detection of Occupational Fraud
21
Methodology
66
Spotlight: Hotline and Reporting Mechanism Effectiveness
24
Analysis Methodology
66
Reporting Mechanisms
26
Survey Participants
67
Parties to Whom Whistleblowers Report
27
Regional Focus
70
Victim Organizations
28
Asia-Pacific
70
Type of Organization
28
Eastern Europe and Western/Central Asia
72
Size of Organization
29
Latin America and the Caribbean
74
Industry of Organization
32
Middle East and North Africa
76
Anti-Fraud Controls at Victim Organizations
34
Spotlight: Modifying Anti-Fraud Controls Following a Fraud
39
Southern Asia
78
Spotlight: COVID’s Effect on Occupational Fraud
40
Sub-Saharan Africa
80
Background Checks
41
United States and Canada
82
Internal Control Weakness that Contributed to the Fraud
42
Western Europe
84
Perpetrators
44
Statistical Appendix
86
Perpetrator’s Position
44
Perpetrator’s Tenure
46
Index of Figures
89
Perpetrator’s Department
46
Fraud Prevention Checklist
92
Spotlight: How Does Tenure Affect Fraud Risk?
48
Perpetrator’s Gender
51
Glossary of Terminology
94
Perpetrator’s Age
54
About the ACFE
95
CONTENTS Occupational Fraud 2022: A Report to the Nations
3
KEY FINDINGS
OUR STUDY COVERED:
133
2,110 from
COUNTRIES
CASES
CFEs estimate that
organizations LOSE
5%
Causing total losses of more than
$3.6 Billion
MEDIAN LOSS
PER CASE:
$117,000
of revenue
to FRAUD
AVERAGE LOSS
PER CASE:
each year
$1,783,000
DETECTION
SCHEMES
ASSET MISAPPROPRIATION SCHEMES
42
are the most common but least costly
% of frauds were
detected by tips,
which is nearly 3x as many cases as
the next most common method
More than HALF
of all tips came
from employees
86%
of cases
$100,000
median loss
FINANCIAL STATEMENT FRAUD SCHEMES
are the least common but most costly
9%
40%
$593,000
median loss
of cases
33%
27%
Email
Web-based/
online form
Telephone
hotline
Email and web-based
reporting BOTH surpassed
telephone hotlines
was the most common scheme
in every global region
ORGANIZATIONS WITH HOTLINES
A TYPICAL FRAUD CASE
detect fraud more quickly and have lower losses
than organizations without hotlines
causes a loss of
$8,300 per
month
lasts 12 months
before detection
$200,000
$100,000
12
Months
With fraud hotlines
4
18
Months
Median loss
Duration
Without fraud hotlines
Key Findings Occupational Fraud 2022: A Report to the Nations
8
of fraud cases
% involved
the use
of CRYPTOCURRENCY
Among these cases, cryptocurrency was most commonly used for:
48
% Making
bribery and
kickback payments
43
% Converting
misappropriated
assets
KEY FINDINGS
VICTIM ORGANIZATIONS
TOP 5 MEDIAN LOSSES BY INDUSTRY
Real estate
Wholesale trade
$435,000
Transportation and warehousing
$400,000
Construction
ORGANIZATIONS WITH THE
FEWEST EMPLOYEES HAD THE
HIGHEST MEDIAN LOSS
($150,000)
$250,000
Utilities
$203,000
$200,000
PERPETRATORS
Owners/executives committed
only 23% of occupational frauds,
but they caused the largest losses
ANTI-FRAUD CONTROLS
Nearly half of all occupational frauds
came from these four departments:
The presence of anti-fraud controls
is associated with
LOWER
fraud losses
Owner/executive
$337,000
Operations
15%
Accounting
12%
Manager
$125,000
Employee
$50,000
Executive/upper
management
Sales
QUICKER
fraud detection
Nearly HALF of cases occurred due to:
Lack of
internal controls
Override of
existing controls
OR
11%
of victim organizations
MODIFIED their anti-fraud
controls following the fraud.
11%
Only 6%
displayed
BEHAVIORAL RED
FLAGS of fraud
AND
of perpetrators had a
prior fraud conviction
75%
64%
Increased management
review procedures
Increased use of proactive
data monitoring/analysis
CASE RESULTS
61%
of perpetrators were
terminated by their employers
58%
of cases were referred to
law enforcement
66%
of cases referred to law enforcement
resulted in a conviction
50%
of organizations that didn’t refer cases to law
enforcement cited internal discipline as the reason
Key Findings Occupational Fraud 2022: A Report to the Nations
5
INTRODUCTION
This study represents the most comprehensive
examination available of the costs, methods,
victims, and perpetrators of occupational fraud.
Occupational fraud is very likely the most costly and
The data contained in Occupational Fraud 2022:
most common form of financial crime in the world.
A Report to the Nations represents our best effort to
The term occupational fraud refers to frauds that are
understand and measure the impact of occupational
committed by individuals against the organizations that
fraud. Based on 2,110 cases of occupational fraud
employ them.1
that were investigated between January 2020 and
There are two key reasons why this type of crime
is so prevalent. The first is that any organization
with employees must, to some extent, entrust those
employees with access to or control over its assets,
whether that means keeping its books, managing its
bank accounts, safeguarding its inventory, etc. It is this
September 2021, we have compiled statistics on the
methods used to commit these crimes, the means by
which they were detected, the characteristics of both the
victims and the perpetrators, and the ways in
which victim organizations responded after the
frauds were detected.
very trust that can make organizations vulnerable to
This report is based on data that was supplied to us by
occupational fraud. Because all frauds, at their heart,
Certified Fraud Examiners (CFEs) throughout the world
are based upon breaches of trust. The second reason
who took part in the 2021 Global Fraud Survey. Each
occupational fraud is so costly and common is simply
CFE who participated in the study was presented with an
that there are so many people in a position to commit
online questionnaire consisting of 77 detailed questions
these crimes. The global labor force consists of more
about a fraud case the CFE had personally investigated.
than 3.3 billion people2, a large majority of whom will
We are deeply grateful to the CFEs who took part in
never steal or abuse the trust of their employers. But if
this survey and shared information so that others could
even a tiny percentage of these individuals cross the
benefit from their experiences. This report is, in many
line, the result is millions of occupational fraud schemes
ways, a testament to the dedication and generosity of
being committed annually.
those CFEs.
We do not know precisely how many people engage
The frauds represented in this study were committed
in occupational fraud each year, but we know that the
in 133 countries, and they targeted organizations in
collective harm these criminals inflict is enormous.
23 distinct industry categories. They attacked large
As you will see in this report, global losses are likely
multinational businesses, small private companies,
measured in trillions of dollars. This represents money
government agencies, nonprofits, and every other size
that could have been spent creating jobs, producing
or type of organization imaginable. This report truly is
goods and services, or providing public services. Instead,
a global study of occupational fraud, and as its results
it went into the pockets of fraudsters.
make clear, no organization is immune from these crimes.
Occupational fraud is formally defined as the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the
employing organization’s resources or assets.
1
2
6
The World Bank DataBank, “Labor Force, Total (1990–2020),” https://data.worldbank.org/indicator/SL.TLF.TOTL.IN.
INTRODUCTION Occupational Fraud 2022: A Report to the Nations
The goal of Occupational Fraud 2022: A Report to the Nations is to compile
detailed information about occupational fraud cases in five critical areas:
•
The methods by which occupational
fraud is committed
•
The characteristics of the people who
commit occupational fraud
•
The means by which occupational frauds
are detected
•
•
The characteristics of the organizations
that are victimized by occupational fraud
The results of the cases after the frauds
have been detected and the perpetrators
identified
FIG. 1 REPORTED CASES BY REGION
Sub-Saharan Africa
United States and Canada
CASES:
675 (36%)
CASES:
429 (23 )
CASES:
145 (8%)
CASES:
Latin America
and the Caribbean
CASES:
95 (5%)
194 (10%)
Southern Asia
Middle East and North Africa
Western Europe
CASES:
Asia-Pacific
%
138 (7%)
CASES:
138 (7%)
Eastern Europe and
Western/Central Asia
CASES:
78 (4%)
INTRODUCTION Occupational Fraud 2022: A Report to the Nations
7
THE GLOBAL COST OF FRAUD
Fraud is a truly global problem, affecting organizations in every region and in every industry worldwide. Measuring the true extent of the
damage caused by occupational fraud can be challenging due to the inherent nature of concealment and deception involved in most
schemes. However, our study provides some valuable insight into the scope of this issue and how it affects organizations everywhere.
OUR STUDY COVERED
COUNTRIES
CASES
Causing total
losses of more than
CFEs estimate that
organizations LOSE
133
2,110 from
$3.6 Billion
5%
$1,783,000
Projected
against 2021 GWP
($94.94 TRILLION),
that’s more than
of revenue
to FRAUD
$4.7
TRILLION
each year
lost to
FRAUD GLOBALLY
AVERAGE LOSS PER CASE
21% $1 MILLION+
OF CASES HAD LOSSES OF
WWW.IMF.ORG/EXTERNAL/DATAMAPPER/NGDPD@WEO/WEOWORLD
LOSS PER CASE
25 PERCENTILE
$600,000
MEDIAN
TH
$20,000
$20,000
75TH PERCENTILE
$100,000
$117,000
$200,000
$300,000
$400,000
$500,000
$600,000
LOSS PER REGION
$1,200,000
$1,125,000
$1,000,00
$800,000
$915,000
KEY
$875,000
75th
Percentile
$723,000
$649,000
$10,000
$600,000
$577,000
$500,000
$400,000
$200,000
$0
8
50th
Percentile
(Median)
$352,000
$121,000
$15,000
$190,000
$42,000
$175,000
$186,000
$33,000
$42,000
Asia-Pacific Eastern Europe Latin America Middle East
and Western/
and the
and North Africa
Central Asia
Caribbean
THE GLOBAL COST OF FRAUD Occupational Fraud 2022: A Report to the Nations
$173,000
$92,000
$100,000
$15,000
$120,000
$20,000
$173,000
$60,000
$60,000
Southern
Asia
Sub-Saharan
Africa
United States
and Canada
Western
Europe
25th
Percentile
HOW IS OCCUPATIONAL
FRAUD COMMITTED?
Since the release of the first Report to the Nation in 1996, we have analyzed
more than 20,000 cases of occupational fraud reported to us by CFEs. In each
study, we have explored the mechanisms used by the fraud perpetrators to
defraud their employers. Even with the shift toward digital payments, remote work
environments, and technology-based organizations, the schemes and methods
fraudsters use to commit occupational fraud remain consistent over time. A
taxonomy of these schemes is provided in the Occupational Fraud and Abuse
Classification System, also commonly referred to as the Fraud Tree (see Figure 3).
Categories of Occupational Fraud
At the top level, there are three primary categories of occupational fraud. Asset misappropriation, which involves an employee stealing or misusing the employer’s resources, is the most common, with 86% of cases falling under this category.
These schemes, however, tend to cause the lowest median loss at USD 100,000 per case (see Figure 2). In contrast,
financial statement fraud schemes, in which the perpetrator intentionally causes a material misstatement or omission in the
organization’s financial statements, are the least common (9% of schemes) but costliest (USD 593,000) category. The third
category, corruption—which includes offenses such as bribery, conflicts of interest, and extortion—falls in the middle in
terms of both frequency and losses. These schemes occur in 50% of cases and cause a median loss of USD 150,000.
FIG. 2 HOW IS OCCUPATIONAL FRAUD COMMITTED?
Asset
misappropriation
86%
$100,00o
$150,00o
Corruption
50%
Financial
statement fraud
$593,00o
9%
Median loss
Percent of cases
HOW IS OCCUPATIONAL FRAUD COMMITTED? Occupational Fraud 2022: A Report to the Nations
9
FIG. 3 OCCUPATIONAL FRAUD AND ABUSE CLASSIFICATION SYSTEM (THE FRAUD TREE)3
Corruption
Asset Misappropriation
Financial Statement Fraud
Net Worth/
Net Income
Overstatements
Net Worth/
Net Income
Understatements
Invoice
Kickbacks
Timing
Differences
Timing
Differences
Bid Rigging
Fictitious
Revenues
Understated
Revenues
Concealed
Liabilities and
Expenses
Overstated
Liabilities and
Expenses
Improper
Asset
Valuations
Improper
Asset
Valuations
Improper
Disclosures
Improper
Disclosures
Conflicts of
Interest
Bribery
Purchasing
Schemes
Sales
Schemes
Illegal Gratuities
Economic
Extortion
Inventory and All
Other Assets
Cash
Theft of Cash
on Hand
Theft of Cash
Receipts
Skimming
Receivables
Sales
Unrecorded
Understated
Write-Off
Schemes
Lapping
Schemes
Cash Larceny
Refunds
and Other
Fraudulent
Disbursements
Billing
Schemes
Payroll
Schemes
Expense
Reimbursement
Schemes
Check and
Payment
Tampering
Register
Disbursements
Shell
Company
Ghost
Employee
Mischaracterized
Expenses
Forged Maker
False Voids
NonAccomplice
Vendor
Falsified
Wages
Overstated
Expenses
Forged
Endorsement
Personal
Purchases
Commission
Schemes
Fictitious
Expenses
Altered Payee
Multiple
Reimbursements
Authorized
Maker
Unconcealed
3
10
Misuse
The definitions for many of the categories of fraud schemes in the Fraud Tree are found in the Glossary of Terminology on page 94.
HOW IS OCCUPATIONAL FRAUD COMMITTED? Occupational Fraud 2022: A Report to the Nations
Larceny
Asset
Requisitions
and Transfers
False Sales
and Shipping
Purchasing
and Receiving
False Refunds
Unconcealed
Larceny
Fraudsters do not necessarily limit themselves to one method of stealing. Of the cases in our study, 40% involved
more than one of the three primary categories of occupational fraud. As noted in Figure 4, 32% of fraudsters
committed both asset misappropriation and corruption schemes as part of their crime, 2% misappropriated assets
and committed financial statement fraud, 1% engaged in both corruption and financial statement fraud, and 5%
included all three categories in their schemes.
FIG. 4 HOW OFTEN DO FRAUDSTERS COMMIT MORE THAN ONE TYPE OF OCCUPATIONAL FRAUD?
Financial
statement fraud
Asset
misappropriation
Asset misappropriation only
47%
Asset misappropriation and corruption
32%
Corruption only
12%
Corruption, asset misappropriation, and financial statement fraud

5%
Asset misappropriation and financial statement fraud
2%
Financial statement fraud only
1%
Corruption and financial statement fraud
1%
ASSET MISAPPROPRIATION SCHEMES
are the most common but least costly
86%
of cases
Corruption
$100,000
median loss
FINANCIAL STATEMENT FRAUD SCHEMES
are the least common but most costly
9%
of cases
$593,000
median loss
HOW IS OCCUPATIONAL FRAUD COMMITTED? Occupational Fraud 2022: A Report to the Nations
11
ASSET MISAPPROPRIATION SUB-SCHEMES
Because asset misappropriations make up such a large percentage of occupational fraud cases, we divide these frauds
into nine distinct categories to better illustrate how they affect organizations. Figure 5 is a heat map that shows the
frequency and median loss of each asset misappropriation sub-scheme (see Glossary on page 94 for definitions of each
sub-scheme). Billing schemes present a significant risk given that they are the most common form of asset misappropriation and also cause the highest median loss. Other high risks based on the combination of frequency and financial
impact are check and payment tampering, as well as noncash schemes (such as theft of physical assets, investments, or
proprietary information).
Billing
Check and
payment tampering
FIG. 5 WHICH ASSET MISAPPROPRIATION SCHEMES PRESENT THE GREATEST RISK?
Noncash
Billing
Check and
payment tampering
Noncash
Skimming
Payroll
Expense reimbursements
Cash larceny
Cash larceny
Register
disbursements
Skimming
Payroll
Expense reimbursements
Cash on hand
Register
disbursements
Cash on hand
Less risk
More risk
Less risk
Category
Billing
Number of cases
Percent of all cases
416
Noncash
Category
Number 385
of cases
232
416
20% 11%
Noncash
Check and
payment tampering
385
208
18% 10%
232
199
11% 9%
10%
Check and payment tampering
208
Cash on hand
199
9%
198
9%
Skimming
Payroll Skimming
Cash larceny
Payroll
RegisterCash
disbursements
larceny
Register disbursements
198
198
169
198
9%
9%
58
169
9% 8%
8% 3%
58
3%
HOW IS OCCUPATIONAL FRAUD COMMITTED? Occupational Fraud 2022: A Report to the Nations
Median loss
20%
Percent of all18%
cases
Expense
reimbursements
Billing
Cash onExpense
hand reimbursements
12
More risk
$100,000
Median loss $78,000
$100,000 $40,000
$78,000 $100,000
$40,000
$100,000
$15,000
$15,000
$50,000
$50,000
$45,000
$45,000
$10,000
$45,000 $45,000
$10,000
Duration of Fraud Schemes
Try as they might, organizations cannot prevent all fraud; if an organization is operational long enough, eventually an
employee will commit fraud. Consequently, the ability to quickly detect fraud is crucial. Our research indicates that the
median duration of fraud—that is, the typical time between when a fraud begins and when it is detected—is 12 months.
Additionally, Figure 6 shows that the longer a fraud remains undetected, the greater the financial loss.
FIG. 6 HOW DOES THE DURATION OF A FRAUD RELATE TO MEDIAN LOSS?
$800,00o
$698,00o
$450,00o
$300,00o
$47,00o
≤6 months
$100,00o $125,00o $110,00o
7–12
months
13–18
months
19–24
months
9%
25–36
months
9%
37–48
months
49–60
months
4%
5%
>60 months
6%
13%
21%
Median loss
Percent of cases
33%
HOW IS OCCUPATIONAL FRAUD COMMITTED? Occupational Fraud 2022: A Report to the Nations
13
When designing anti-fraud controls, assessing fraud risks, and implementing proactive detection measures, it is helpful to
understand the potential impact of different types of fraud schemes. In addition to analyzing the frequency and median
loss of the categories of occupational fraud (see Figures 2 and 5), we also examined the duration of cases (in months) in
each category. As noted in Figure 7, companies tend to catch register disbursements, noncash, corruption, and cash on
hand schemes the quickest (12 months). Other schemes such as billing, check and payment tampering, expense reimbursements, financial statement fraud, and payroll typically last a year and a half before being uncovered.
FIG. 7 HOW LONG DO DIFFERENT OCCUPATIONAL FRAUD SCHEMES LAST?
Billing
Check and payment tampering
Expense reimbursements
Financial statement fraud
Payroll
Skimming
Cash larceny
Cash on hand
Corruption
Noncash
Register disbursements
14
HOW IS OCCUPATIONAL FRAUD COMMITTED? Occupational Fraud 2022: A Report to the Nations
18 months
18 months
18 months
18 months
18 months
16 months
14 months
12 months
12 months
12 months
12 months
Velocity of Fraud Schemes
Fraud schemes affect companies differently, and organizations must make decisions about how and where to direct their
anti-fraud efforts. Therefore, we analyzed how quickly occupational fraud tends to cause harm, as well as the variation in
this speed among different scheme types.
To determine the velocity for different types of fraud, we divided the loss amount by the number of months the scheme
lasted before detection. The median velocity for all cases reported was a loss of USD 8,300 per month. Analyzing the velocity by scheme type, however, reveals that certain types of occupational fraud cause damage much faster than others.
As Figure 8 shows, financial statement fraud schemes have the greatest velocity of USD 32,900 per month, followed by
corruption schemes, with a velocity of USD 12,500 per month. Organizations can use this data to prioritize their resources—for example, by investing more in measures aimed at protecting against high-velocity schemes.
FIG. 8 WHAT IS THE TYPICAL VELOCITY (MEDIAN LOSS PER MONTH) OF DIFFERENT OCCUPATIONAL FRAUD SCHEMES?
Financial statement fraud
$32,900
Corruption
$12,500
Noncash
$6,500
Check and payment tampering
$5,600
Billing
$5,600
Cash larceny
$3,200
Skimming
$3,100
Payroll
$2,500
Expense reimbursements
$2,200
Cash on hand
$1,300
Register disbursements
$800
Median loss
Median duration
Scheme velocity
(loss per month)
One perpetrator
$57,000
12 months
$4,800
Two perpetrators
$145,000
12 months
$12,100
Three or more perpetrators
$219,000
12 months
$18,300
Employee
$50,000
8 months
$6,300
Manager
$125,000
16 months
$7,800
Owner/executive
$337,000
18 months
$18,700

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